MORAD & TULUN

[2020] FamCA 706

FAMILY COURT OF AUSTRALIA

MORAD & TULUN [2020] FamCA 706

FAMILY LAW – PROPERTY – binding financial agreements – whether agreement is binding – whether Wife received independent legal advice – whether the parties by their conduct abandoned the agreements – whether there has been a change of circumstances making it impossible or impractical to implement binding financial agreements – whether there has been unconscionable conduct in procuring entry to BFA – whether the agreements are void, voidable or unenforceable on the basis of undue influence – where criticisms are not made out – costs.

Family Law Act 1975 (Cth) ss 79, 90G, 90G(1)(b), 90K, 90K(1)(c)

Sanger & Sanger (2011) 46 FamLR 275
Thorne v Kennedy [2017] HCA 49

APPLICANT: Ms Morad

RESPONDENT: Mr Tulun

FILE NUMBER: SYC 8420 of 2019

DATE DELIVERED: 27 August 2020

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 5 - 6 August 2020

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Hall Partners

COUNSEL FOR THE RESPONDENT: Mr Stapleton

SOLICITOR FOR THE RESPONDENT: Robertson Saxton Osborne

Orders

1. The Wife’s Amended Initiating Application filed 23 March 2020 is dismissed.

2. In the event that the Husband pursues his costs application he is to file and serve within 14 days a financial statement along with any affidavit material that he relies upon in relation to such application.

3. Within 28 days the Wife is to file and serve a financial statement along with any affidavit material she relies upon in relation to the Husband’s costs application.

4. The costs aspect is listed for hearing to 23 October 2020 at 2 pm and the parties are to attend, unless otherwise directed, by Microsoft Teams.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Morad & Tulun has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: SYC 8420 of 2019

Ms Morad

Applicant

And

Mr Tulun

Respondent

REASONS FOR JUDGMENT

1. This matter was listed to deal with a number of preliminary issues relating to the property of the parties, being firstly the operation of two purportedly binding financial agreements, and then leave for the Wife, should the agreements not be binding, to commence proceedings for property division out of time.

2. The parties married in 1988 and divorced in 2018.  There are two adult children of the marriage.  Their date of separation is contentious.

3. The Wife has filed:

   (a)       Financial statement filed 10 December 2019;

   (b)Her affidavit filed 10 December 2019 which contains BFA dated 29 April 2009 and 23 December 2009;

   (c)       Amended Initiating Application filed 23 March 2020;

   (d)       Affidavits of Ms D filed 21 April 2020 and 17 June 2020;

   (e)       Affidavit of Ms C filed 21 April 2020;

   (f)       Affidavit of Ms G filed 21 April 2020;

   (g)       Affidavit of Ms B filed 21 April 2020;

   (h)       Affidavit of Mr F filed 22 April 2020; and

   (i)        Her affidavits – 23 March 2020 and 27 May 2020

4. The Husband has filed:

   (a)       Financial statement filed 5 March 2020

   (b)       Response to Amended Initiating Application filed 6 April 2020; and

   (c)       His affidavits filed 5 March 2020, 6 April 2020 and 6 May 2020

5. Specifically the Wife sought a suite of orders as set out in her amended Initiating Application filed 7 April 2020 in relation to the following:

   a)Declarations that the Husband falsely swore documents as to the date of separation and as to the value of two properties in material he filed on 5 March 2020;

   b)A declaration as to the parties’ separation on 15 December 2017;

   c)A declaration that the purported binding financial agreement executed 29 April 2019 (BFA1) is not binding;

   d)A declaration that the purported binding financial agreement executed 23 December 2019 (BFA2) is not binding;

   e)An order that the proceedings be taken to have been commenced by the Wife on 1 June 2019, or that alternatively, the Wife be granted leave to commence proceedings out of time;

   f)An order restraining the Husband from encumbering particular properties, and permitting the Wife to obtain caveats in relation to those properties.

6. The Husband asserted that the declarations sought by the Wife are not within the power of the Court to make.  It is unclear that all of the declaratory relief sought by the Wife is available.  However, it is commonplace for declarations to be made as to whether a BFA is, or is not, binding.  Such a declaration is, in effect, a declaration that goes to the jurisdiction of the Court to determine a property application as, if an agreement is binding, is not terminated, and is not set aside, the Court lacks jurisdiction to determine a property dispute.  Declaration in such circumstances is a remedy that is incidental to the ability of the Court to determine whether a matter lies within jurisdiction.

7. The key issue is the determination of whether BFA2 is binding.  The relief in respect of the commencement of proceedings by the Wife, and injunctive relief against the Husband only arises if BFA2 is not binding.

8. The Husband seeks the Wife’s application be dismissed, and that she pay his costs on an indemnity basis.  Although the Wife’s application involves setting aside both BFA1 and BFA2, the Husband only seeks to rely upon BFA2.

9. The issue of first importance, then, is as to the effect of BFA2.  In considering this aspect, it is not disputed that BFA1 and BFA2 were entered into.  The issue is whether they are binding.

10. The parties were directed on 28 July 2020 to set out in their case outline documents, the legal basis by which they assert that the agreements are binding or not binding, the factual propositions they advance in respect of such, and where the relevant factual material is located in their affidavit material to sustain those factual propositions.

11. Firstly, the Wife claims that she did not receive independent legal advice in relation to BFA1 or BFA2 and that the Husband was aware of this.

12. Secondly, the Wife claims that the parties, by their conduct, abandoned the agreements.

13. Thirdly, the Wife claims that there has been a change of circumstances making it impossible or impractical to implement BFA1 or BFA2.

14. Fourthly, the Wife claims that there has been unconscionable conduct by the Husband in procuring the Wife’s entry into BFA1 and BFA2.

15. Fifthly, the Wife claims that BFA1 and BFA2 are void, voidable or unenforceable on the basis of undue influence.

16. The Husband disputed each of the Wife’s claims.

The lack of legal advice claim

1. The Wife claims that she did not receive the requisite independent legal advice prior to executing either BFA1 or BFA2 and further that the Husband was aware that she did not.  This issue relates to the requirement set out at s 90G(1)(b), that for a financial agreement to be binding upon parties:

   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 the party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and

2. The Wife’s claim that she did not receive independent legal advice is made in the context of there being certificates of independent legal advice for the Wife for both BFA1 and BFA2.

3. BFA2 is annexed to the Husband’s affidavit of 5 March 2020.  It is also annexed to the Wife’s affidavit of 27 November 2019.  It is executed by both the Husband and the Wife.  In it each asserts to have received advice prior to the execution of the agreement.  Attached to it are certificates of independent legal advice.

4. Mr Robertson of Robertson, Saxton, Primrose Dunn executed a certificate on 23 December 2009, asserting therein that he had advised the Husband separately from the other party as to the effects of BFA2, on his rights along with the advantages and disadvantages to him of entering into BFA2.

5. Likewise, Mr Farquhar executed a certificate to the same effect, but in respect of the Wife on 22 December 2009.

6. The certificates are admissible on the basis that the fact of the production of the certificate, and its provision to the other party is a relevant criteria in assessing whether the requirements of s 90G have been met.  As it is admissible for that non-hearsay purpose, it is also admissible for its hearsay assertion made by the solicitor as to the giving of the independent advice.

7. However, the Wife denies having received this advice, or having even attended on Mr Farquhar in respect of BFA2. 

8. Rather, she asserts that the Husband was insistent that they enter into both BFAs and that although she attended on Mr Farquhar for BFA1, she was not given independent advice in relation to BFA1, as the Husband was present at the time of her attendance, and that Mr Farquhar did not advise her as set out in his certificate.

9. The Husband denied that he was present for the attendance on Mr Farquhar, other than remaining outside having taken the Wife to Mr Farquhar’s office.

10. The Wife says that the Husband presented BFA2 to her at their home and asked her to sign both the BFA and the (then undated) declaration as to separation.

11. The Husband disputed that this was how BFA2 and the separation declaration came to be executed.

12. The evidence that related to the Wife’s dealing with Mr Farquhar were significant to the resolution of this factual dispute.

13. Since dealing with BFA1 and BFA2, Mr Farquhar has retired. His file was produced by the firm that took over his practice (Exhibit H1), although Mr Farquhar identified that the file that was produced was incomplete, lacking, for example, his file notes that would have been taken by hand.  He did not know the manner in which old files were retained by the firm.

14. Mr Farquhar, as might be expected, had little direct recollection of his dealing with the Wife, having no specific recollections other than in relation to attending at her home in Suburb K.

15. Mr Farquhar was largely reliant on the matters contained in the file as setting out his dealings with the Wife.  In particular, he identified that the invoices that were prepared in the matter would have been prepared on his instructions, based upon entries in his diary.  Three invoices were produced with the file, apparently prepared relatively close to the dates on which the relevant events being billed had occurred.  Each invoice contained a list of the works for which the billing was justified, including as to advice being sent to the Wife by facsimile, a list of attendances by telephone, and face to face attendances.

16. The file also contained various correspondence sent to the Wife.

17. The Wife made a number of criticisms regarding Mr Farquhar’s evidence and the file that was produced.

18. The first criticism related to the correspondence that was sent by facsimile to the fax machine in the Husband’s home office, or by email to his computer.  This home office was next to the kitchen in the home in Suburb L.  The Wife denied receiving this correspondence, explaining that she never entered the home office, or accessed either the fax machine or the Husband’s computer in that office.  Her evidence was supported by her two daughters.  The Wife asserted that the Husband must have retained these advices from Mr Farquhar (whom he identified for the Wife’s use and whose bills the Husband paid) and not passed them onto the Wife.  Those advices provided by Mr Farquhar (contained on the file) were highly critical of the BFAs, frankly offering the opinion that it was not in the Wife’s interest to enter into the BFAs.

19. Undermining the Wife’s assertion that she had no access to the Husband’s home office in Suburb L, the Husband produced email correspondence from that computer that was referable to the Wife accessing the computer, and referable to the Wife providing the Husband’s email address for the purpose of booking a flight for her mother.

20. This is indicative of some access.  It does not, however, answer the question of whether the Wife accessed the facsimile advices from Mr Farquhar.  The claims in relation to the facsimiles need to be seen in the context of other attendances on Mr Farquhar. The evidence contained on the file spoke to numerous advice received by the Wife from Mr Farquhar, either face to face or by telephone.

21. The invoices on Mr Farquhar’s file, as supported by his testimony, identify that:

    a)Advice and correspondence was sent to the Wife on 21 April 2009, 23 April 2009, evidencing a conference with the Wife, 24 April 2009, and 27 April 2009, evidencing a further conference with the Wife;

    b)The invoice of 27 April 2009 evidenced 6 telephone and 2 face to face conferences in relation to BFA1 leading up to 27 April 2009;

    c)Advice and correspondence was sent to the Wife on 22 December 2009 re BFA2;

    d)The invoice of 23 December 2009 evidenced at least 5 further telephone attendances commencing in July 2009 and a face to face attendance for the execution of BFA2 on 22 December 2009;

    e)The invoice of 10 February 2010 evidenced telephone attendance on the Wife of 22 January 2010 and face to face attendance on the Wife at Suburb K on 2 February 2010 for her to execute the separation declaration.

22. The Wife disputed the accuracy of the invoices from Mr Farquhar in relation to such attendances.  In doing so, in addition to pointing to her evidence that she had not spoken to Mr Farquhar on the telephone, and that she had only attended upon him once, the Wife raised two other matters in relation to her assertion that the invoices should not be relied upon.

23. The first was the evidence that indicated that Mr Farquhar had the wrong telephone number for the Wife.  The Wife’s number was purportedly recorded at page 2 of Exhibit H1.  It is recorded as … .  Mr Farquhar said that this is the number that he would have used to contact the Wife.  However, the Wife asserts that her number was different, being … .  If Mr Farquhar was using the wrong number, then the question arises as to how the telephone attendances could take place.

24. In assessing this issue, a number of matters need to be borne in mind.  The first is that Mr Farquhar observed that the file that was produced was incomplete, devoid of handwritten file notes, it being his practice to take files notes by hand.  If there was a correction to the telephone number, then the correction was not necessarily retained as part of the file in archive.

25. The second is that the invoices record multiple attendances by telephone progressing the matter and culminating in face to face attendances for the execution of the BFAs.  This sequence supports the notion that, regardless of the incorrect number being recorded at page 2 of Exhibit H1, Mr Farquhar engaged in telephone attendances upon the Wife, which resulted in face to face attendances.

26. What gives extra reason for reaching such a conclusion is the conflict of evidence in relation to the face to face attendances.  While the Wife alleges that these only occurred once, the invoices paint a very different story, totalling four occasions of face to face attendances.  Face to face attendances on three of those occasions are supported by evidence of the Wife’s execution of the two BFAs and the separation declaration on those dates noted in the invoices.

27. BFA1 was executed by the Wife and Mr Farquhar prior to it becoming an agreement on 29 April 2009.  The associated certificate of independent legal advice was executed by Mr Farquhar on 27 April 2009, which corresponded with the date his invoice recorded that he attended upon the Wife on a face to face basis for discussion and execution of documents.

28. BFA2 was recorded as being made on 23 December 2009, with the certificate of independent legal advice being executed by Mr Farquhar on 22 December 2009, reflecting the date on which his invoice records the attendance, on a face to face basis, upon the Wife.

29. The separation declaration was executed by the Wife and witnessed by Mr Farquhar on 2 February 2010.

30. It was supported by the invoice for that day that records Mr Farquhar attending on the Wife at Suburb K for the execution of the declaration.

31. It may be seen then that there are documents executed by the Wife that correspond to the dates that Mr Farquhar charged her for face to face attendances.

32. The second matter relied upon by the Wife to undermine the evidence of Mr Farquhar related to his evidence in relation to attending upon the Wife at Suburb K.  His evidence was that this had, on his recollection, occurred shortly before Christmas in relation to the execution of BFA2.  This cannot be so, given that the Wife had not moved into the Suburb K property at that stage.  It also does not sit with his invoice that he attended Suburb K on 2 February for the execution of the separation declaration.  Hence, I accept that Mr Farquhar is wrong about his attendance at Suburb K to execute BFA2.  He is clearly in error.  However, it is not an error that undermines the evidence of the personal attendances on the Wife.  It is merely an error that undermines which of those occurred at Suburb K.  On that issue, I prefer the evidence recorded in the invoice.

33. These matters lead me to the conclusion that the Wife is unreliable in her evidence regarding her attendances on Mr Farquhar.  She has not been truthful in her evidence about this aspect.

34. This conclusion is further bolstered by other credibility issues in relation to the Wife that flow from evidence in relation to the date of separation which will be discussed further below.

35. These cause me to doubt the Wife’s evidence that she did not receive the facsimiles from her solicitor.  It may be observed that the facsimiles formed a part of integrated communications between the Wife and her solicitor.  Telephone and face to face attendances occurred in the context of the facsimiles.  It appears highly unlikely that the Wife attended on her solicitor, and engaged in telephone conversations with her solicitor whilst being unaware of the facsimiles that he had sent. On balance, it should be concluded that she did receive the correspondence from her solicitor. 

36. Even on her account of arrangements between the parties regarding facsimiles and emails she agreed that the Husband would pass correspondence for the Wife to her if it was important (i.e. other than advertising material).  I do not accept that the Husband withheld such from her.   

37. However, even if she did not receive them, the interactions between herself and her solicitor by telephone and face to face, accompanied by her assertion in executing each BFA that she had received independent legal advice, accompanied by the certificate of independent advice and Mr Farquhar’s evidence that further advice would have been given during conference with her mean that I am in any event still satisfied that the Wife received the requisite advice.

38. In coming to this conclusion I have not disregarded a further criticism made on behalf of the Wife regarding the advice.  That criticism was that although in the facsimiles Mr Farquhar had set out disadvantages to the Wife in entering into the BFAs, in the facsimiles there was no identification of the advantages.  However, Mr Farquhar observed that the other conferences with the Wife would have amplified what was contained in writing, and the certificates executed by Mr Farquhar stipulated that he had provided advice in relation to both disadvantages and advantages.  It may further be observed that it was entirely appropriate for Mr Farquhar, in providing this advice to the Wife and in protecting her interests, to dwell upon the disadvantages to her of the BFAs.

1. This criticism is not made out.

2. The lack of legal advice claim by the Wife fails.

Separation

1. A matter of significant contention between the parties was the date of separation.  This was a matter of importance as BFA2 was reliant on separation as well as a separation declaration in order to enter into force.

2. On either party’s account, there was some ambiguity about the nature of the parties’ relationship from early 2010.

3. The Wife disputes that the separation took place in January 2010.  She agrees that from the purchase of the Suburb K home in December 2009, the Wife and children have lived in that home.  She says that the Husband also moved into that home following its purchase, living there about 4 days per week, and that they remained in a relationship until 2017.

4. The Wife accepted that the Husband had ceased to live with the Wife and their daughters full time at about the time of the move, being the date of separation that she nominated in her divorce application, filed in 2018.  This corresponds (approximately) to when the Husband asserts they separated.

5. However, despite the daughters’ position in the matter, the Husband produced SMS messaging at page 40ff of his affidavit of 6 May 2020 with Ms B messaging the Husband in 2015 and referring to his “home” or staying at “yours tonight.”

6. Cards were produced by the Wife that had been sent to her by the Husband in affectionate, even loving terms.

7. Text messages from the Wife annexed by the Husband at page 28 of his affidavit of 6 May 2020 appear to indicate that the relationship was not ongoing.  However, only limited weight should be placed on this absent a more fulsome production of what passed between the parties.

8. Although the Husband denied keeping belongings such as clothes and toiletries at the Suburb K home, the Wife’s account that he did was supported by their daughters.

9. The Husband disputes that he stayed at the Suburb K home more than a couple of times per month, although he also accepts that there was regular intimacy between himself and the Wife at these times.  He agrees that the Wife often dropped coffee off to him in the mornings when he was a Suburb L, that they would have lunch together, and that they attended family occasions together.  He describes that as he and the Wife are first cousins there is significant overlap between their families.

10. It was the Wife’s contention that the relationship persisted in this manner until 2017 when she says that she discovered that the Husband was having an affair.  She was supported in this contention by the parties’ two adult daughters.

11. It should be accepted that, particularly on the basis of the daughters’ testimony, the Husband’s attendances at the Suburb K property were at a greater frequency than he asserted.

12. The Wife initially asserted that a separation declaration had not been executed by her.  Annexed to the Husband’s affidavit of 5 March 2020 is a separation declaration executed by the Wife on 2 February 2010 asserting that separation occurred on 16 January 2010. 

13. The Wife subsequently admitted to signing the separation declaration, but asserted that there were no dates recorded on the document at the time of her signing it.  She says that she signed it at the time of the execution of BFA2,[1] asserting that the Husband had placed both BFA2 and the separation declaration in front of her and required her to sign them.

    [1] Wife’s affidavit filed 23 March 2020 [43]

14. As noted earlier in the judgment, the separation declaration was executed by the Wife, in her home, in the presence of her solicitor, Mr Farquhar. 

15. Similarly, the Wife’s account of the execution of BFA2 was not correct, the document having been executed before Mr Farquhar.

16. The declaration was attached to correspondence from Mr Farquhar of 15 February 2010 to the Husband’s solicitors.  The letter also sought that the Husband’s solicitors attend to the necessary transfers of title, being an obligation under the BFA.

17. The Wife also obtained a divorce order in 2018.  In her divorce application the Wife asserted a date of separation of 9 November 2009.  She asserted that she nominated this date on the basis of a letter that she had executed on that day, addressed to Mr Farquhar regarding the preparation of BFA2.  She says that she signed the letter on that day because the Husband put it in front of her to be signed.  She subsequently asserted that there was no reason why she chose that date, that she was angry at the time, and it dawned on her that the Husband’s pursuit of a BFA was probably connected to him cheating at the time. 

18. In the face of the ambiguity, the execution of the separation declaration, and the assertion by the Wife in her application for divorce carry significant weight against other evidence that lacks clarity. 

19. The position represented by the separation declaration and the divorce application is further supported by the Wife accepting that, during the time that she asserts that the parties remained in a relationship, she represented to Social Security that they were not.  To a lesser extent, the fact of separation at that time is also suggested by the lack of financial support provided by the Husband to the Wife following the separation declaration.

20. The parties were separated at the time of the Wife’s execution of the separation declaration.

Abandoning the agreement/impracticality of now performing the agreement

1. Although the Wife posed, at the commencement of the hearing, both the issue of abandoning the agreement, and also the issue of impracticability, her focus was on impracticability.

2. Section 90K of the Act sets out the circumstances in which an agreement may be set aside, which includes where the court is satisfied that:

   (1)(c) in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out

3. In Sanger v Sanger the Full Court noted that “impracticable” is without definition in the Act, and that, while authority as to contractual frustration may be of assistance “care must be taken and it must remain at all times in the forefront of the Court’s deliberations that the task before the Court is to interpret and administer a section of the Act.”[2]  The Full Court noted that self-induced frustration deprives a person of a claim in relation to frustration.

   [2]Sanger & Sanger (2011) 46 FamLR 275 [89]

4. In prosecuting the claim of impracticability and abandonment the Wife relied on a number of obligations from BFA2 that she asserted that the Husband had not fulfilled.

5. The Wife alleges that she did not receive, as she was required to, either the vehicle, nor the payment of $60,000 as stipulated by BFA2.  She says that the Husband did not perform all of the stipulated works in relation to the Suburb K property, and that he did not pay child support, although he did make certain payments for the benefit of the children.

6. Relevantly BFA2 provided as follows:

   Recital C…Mr Tulun will pay for and supervise the following work on the Suburb K property after settlement: new electrical wiring with new light fittings, internal timber shutters to all upstairs windows, new carpet to all bedrooms, timber stud partition wall, new front door, new aluminium glazed sliding door, new tiling to the veranda and new internal painting with wall papers to some walls (hereinafter referred to as “the Work”).

   …

   4.  Mr Tulun shall use his own assets and use the proceeds of the J Bank Loan in order to complete the purchase of the Suburb K Property.  Mr Tulun further agrees to complete the Works within a reasonable time after completion, however, Ms Morad agrees that the completion of the Work and the decision of what Work will be done to the Suburb K Property will be at the sole discretion and determination of Mr Tulun.

   …

   11. In the event that the parties separate, Mr Tulun will pay Ms Morad the sum of $60,000 and transfer to her unencumbered all right, title and interest in the vehicle registration number … by way of property settlement within 12 months of separation.

   …

   13.  In the event of separation, Mr Tulun will pay Child Support for the children in accordance with his obligations pursuant to the relevant child support legislation from time to time.

7. It was common that not all of the stipulated works have taken place on the Suburb K property.  No current impediment to their completion has been identified.  It should be observed that despite arguable uncertainty in the obligations imposed in relation to the works, no point was taken to suggest that BFA2 was void for uncertainty.

8. The Suburb K property was purchased in the name of the Wife as had also been agreed.

9. In relation to the Vehicle it was unclear at the end of the case how seriously this issue was pressed.  The circumstances are that the Wife accepts that she retained the use of the vehicle, although it remained in the name of the Husband’s company, until it was damaged in 2012, at which point it was written off and the insurance proceeds, along with $10,000 from the Wife and a sum from the Husband, saw the Wife receive a replacement Vehicle.  This disposal of the original Vehicle, and its use in the acquisition of the subsequent Vehicle, was an enterprise engaged in by the Husband and Wife cooperatively.  The new Vehicle was held in the name of the Husband’s company until 2016 when it was transferred to the Wife at the Wife’s request.

10. The claim made by the Wife is that the failure to transfer the original Vehicle, and its subsequent loss, renders it impracticable for the agreement or part of the agreement to be carried out pursuant to s 90K(1)(c). 

11. Where the Wife retained the (sole) use of the vehicle, was a party to the loss of the vehicle, determined what would happen with the proceeds from the vehicle, acquired another vehicle and directed that it be transferred into her name, the Wife cannot now claim impracticability in relation to this clause of BFA2. 

12. The Wife agrees that she received a lump sum of $60,000 from the Husband in early 2012. 

13. Although she asserted that this was repaid to the Husband in October 2012, at his direction, she subsequently accepted that the payments to the Husband were in respect of additional works that were performed on the Suburb K property, being works managed by the Husband, additional to works called for under BFA2.

14. The Husband agrees that the Wife paid him $70,000 that he says was for works he undertook on her behalf to the Suburb K property including setting up a cinema room.  The Wife agrees that the $70,000 was used for renovation works to Suburb K.

15. It was uncontroversial that the Wife made no application for the Husband to be assessed for child support, and so the obligation to pay did not arise.

16. BFA2 should not be set aside for either abandonment (if such were available) nor for impracticability.

Undue influence and unconscionable conduct

1. Ultimately, the Wife relied upon both unconscionability and undue influence in seeking to set aside the BFA.

2. It is well settled that a binding financial agreement may be set aside by virtue of unconscionability.

3. In Thorne v Kennedy unconscionable conduct was described in the following manner:[3]

   38. A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage “which seriously affects the ability of the innocent party to make a judgment as to [the innocent party’s] own best interests”⁶⁰  . The other party must also unconscientiously take advantage of that special disadvantage⁶¹  . This has been variously described as requiring “victimisation”⁶²  , “unconscientious conduct”⁶³  , or “exploitation”⁶⁴  . Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage

   [3]Thorne v Kennedy [2017] HCA 49 [38]

4. It was further observed by the High Court in that case that:

   41. In any case where a transaction is sought to be impugned by the operation of vitiating factors such as duress, undue influence, or unconscionable conduct, it is necessary for a trial judge to conduct a “close consideration of the facts … in order to determine whether a claim to relief has been established”

5. The Wife identified seven factual matters that she asserted support a finding of unconscionable conduct as follows:[4]

   i)the first agreement was offered to the applicant in final form at a meeting at a solicitor’s office that the respondent had arranged and at which [on the applicant’s case], the respondent attended;

   ii)the applicant says that the second agreement was signed at home where she handed it to the respondent;

   iii)the emotional circumstances in which the agreement was entered, included a perceived need on the part of the parties to the marriage [still married at that time] to seek to protect their assets from unrelated third party litigation involving the applicant’s mother, although whilst they remained together the agreement could never achieve this objective;

   iv)there was no time for the applicant to give the agreement any careful and considered reflection. In the case of the first agreement the applicant says that the respondent was present when its effect was allegedly explained. In the case of the second agreement, the applicant claims that it was signed at home when it was handed to her by the respondent, and that no advice was ever provided or given;

   v)the parties had been in a lengthy marriage and the applicant may be assumed to have placed her confidence and trust in the respondent in the circumstances in which he was the more experienced business person;

   vi)the relative financial positions of the parties in the circumstances in which the deed was signed were that the respondent acquired all of the beneficial or equitable interest in a good deal of titles to real property, to his exclusive benefit;

   vii)on the wife’s case to the extent that independent legal advice had been given, there was no opportunity to reflect upon that advice.

   [4] Applicant’s submissions for hearing filed 31 July 2020 at pages 8 and 9.

6. In final submissions, the Wife emphasised the purported purpose of entering into the binding financial agreements, being for both the protection of the parties’ property from an outside claim, and for the preservation of the marriage.  The latter aspect of these two may be observed not to appear in the list of matters set out in the submissions for the Wife.

7. Given that the above are the matters identified as factually justifying a finding of unconscionability, it is important to identify what facts are found in relation to these.

8. Firstly, the circumstances of the execution of either of the BFAs is not as asserted by the Wife.  Each came after a number of interactions with her solicitor, including advice against entering into the BFA.  That advice took place in writing, by telephone attendances and face to face.  The Wife was not placed in a position of rushed execution of the BFAs with inadequate advice or inadequate opportunity to consider the advice that she was given.

9. In particular, the execution of BFA2 did not take place in the circumstances alleged by the Wife, by means of the Husband handing the Wife the BFA at their home and insisting on her execution of the document.

10. In relation to the nature of the bargain contained in BFA2, the Wife was advised that the terms were unfavourable.  It was assessed as providing to the Wife a little less than half of the overall property of the parties.  However, the nature of the bargain was not such as to point to a conclusion that the Husband took advantage over a special disadvantage on the part of the Wife.  It is undoubtedly the case that the nature of a bargain could point to such a conclusion (see for example the very different circumstances in Thorne v Kennedy) but such is not evidenced here.  While the result may well be less than a litigated s 79 claim for the Wife, the bargain is not of the extreme nature of that in Thorne v Kennedy where the very nature of the bargain pointed to the potential for unconscionability.

11. Each party advanced related, but distinct explanations for entry into BFA1.  The Husband contended that, having observed and been involved in legal disputes in the Wife’s family, he sought to avoid such with the Wife and so entered into a BFA to deal with arrangements should they separate. 

12. The Wife asserted that the BFA was entered into so that their assets would be protected from a request by her mother to support her in litigation she conducted. The Wife had already entered into a guarantee for her mother’s legal fees to her solicitor.  She asserted that the reasoning was that the mother would not go after the family home, and so if that remained in the Wife’s name it would be safe, whilst the transfer of all other assets into the Husband’s name would keep them safe.  As observed by the lawyer for the Mother, the BFA could not have such an effect unless they separated.

13. The circumstances and conversations surrounding the entry into BFA1 and BFA2 remain  unclear.  I am unable to accept the Wife’s descriptions of the circumstances in relation to the obtaining of legal advice and execution of the documents, leading to significant doubts about her reliability into the circumstances generally surrounding the entry in the BFAs.  The burden of establishing circumstances, on the balance of probabilities, that would point to a special disadvantage on the part of the Wife, and the unconscientious use of such by the Husband rests with the Wife.  She has not discharged that burden.

14. Similarly, the reliance on an assumption that the Wife placed her confidence and trust in the Husband due in part to his greater experience in business, is, firstly, not available, as such matters require proof rather than reliance on an assumption and, secondly, inadequate without more to establish special disadvantage and unconscientious use thereof.

15. In summary, even if the factual matters alleged by the Wife to establish unconscionability were sufficient to reach such a conclusion, they have not been made out.

16. The Wife also relied upon her asserted purpose of the BFA (to obtain protection from litigation that the Wife’s mother was involved in[5]) in support of her assertion that her entry into the agreement was the product of undue influence.

    [5] Applicant’s submissions for hearing filed 31 July 2020 at page 9.

17. Undue influence was described by the High Court in Thorne v Kennedy as where a person is deprived of “free agency” in the following manner:

    32. The question whether a person’s act is “free” requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party⁴⁰  . It is not necessary for a conclusion that a person’s free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a “mere channel through which the will of the defendant operated”⁴¹  . Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be “markedly sub-standard”⁴²   as a result of the effect upon the person’s mind of the will of another.

18. As noted above, the factual basis for such a conclusion rested with the Wife to establish.  That factual basis, if it existed, fell to be drawn from the circumstances and conversations surrounding the entry into the BFAs.  The Wife has not established such circumstances.

Conclusion

1. Returning then to the claims identified by the Wife at the commencement of the hearing.  The Wife’s claims as to a lack of legal advice have been rejected.  The Wife’s claims as to abandonment and impracticability were not made out. Finally, the Wife’s claims as to unconscionability and undue influence are not established.

1. The Wife’s claim that BFA2 is not binding is not made out, and her application will be dismissed.  The currency of BFA2 means that the relief sought by the Wife by way of injunction and leave to commence proceedings does not arise.  The Husband sought no other orders than in relation to costs

2. Directions will be made in relation to the costs claim made by the Husband as a result of this outcome.

I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 27 August 2020.

Associate: 

Date:  27 August 2020