Pagani & Pagani
[2023] FedCFamC2F 805
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Pagani & Pagani [2023] FedCFamC2F 805
File number(s): PAC 6933 of 2021 Judgment of: JUDGE MYERS Date of judgment: 30 June 2023 Catchwords: FAMILY LAW – Property Proceedings - Threshold Hearing– Binding Financial Agreement – Binding Financial Agreement Set Aside.
FAMILY LAW – LEGAL PRACTITIONERS – solicitors falsely witnessing Agreement.
Legislation: Family Law Act 1975 (Cth), ss 71A, 79, 90B, 90G(1)(b)(c)(1A), 90K(1)(a)(b), 90KA, 90UJ, Part VIII, Part VIIIA,
Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009,
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules (2015), rr 4.1.3. 30.1.
Cases cited: Abrum & Abrum [2013] FamCA 897 [40]
Black & Black [2006] FamCA 972 [110]
Black & Black [2008] FamCAFC 7 [45]
CGU Insurance Limited v AMP Financial Planning Pty Ltd [2007] HCA 36 [257]
J & J (2006) FamCA 442 [19], [20]
Kaimal & Kaimal [2020] FamCA 971 [16], [17]
NSW Legal Services Commissioner v Zou [2021] NSWCATOD 139 [72], [73]
Stanford v Stanford [2012] HCA 52 [41]
Division: Division 2 Family Law Number of paragraphs: 59 Date of last submission/s: 22 February 2023 Date of hearing: 2 & 22 February 2023 Counsel for the Applicant: Mr Othen Solicitor for the Applicant: Coleman Greig Lawyers Counsel for the Respondent: Mr Ahmad Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
PAC 6933 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS PAGANI
Applicant
AND: MR PAGANI
Respondent
order made by:
JUDGE MYERS
DATE OF ORDER:
30 JUNE 2023
THE COURT ORDERS THAT:
1.The Court finds and declares the Agreement between the parties partially dated June 2011 is not binding on the parties and the Agreement is set aside.
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 Pagani & Pagani has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MYERS J:
This is an interlocutory decision in threshold proceedings between the Applicant Wife, Ms Pagani (‘the Wife’) and the Respondent Husband, Mr Pagani (‘the Husband’).
The Wife seeks orders in accordance with her Amended Initiating Application filed 24 October 2022, that provides:
(1)Declaration that an agreement executed on or about June 2011 (‘the Agreement’) made between the parties under section 90B of the Family Law Act 1975 (Cth) (‘the Act’) is binding. The Wife also seeks consequential orders requiring the parties to give effect to the Agreement, such that within 60 days:
(a)The Wife pay to the Husband 50% of the value of the property at B Street, Suburb C (‘the Suburb C property’);
(b)The Husband do all things necessary to transfer his interest in the Suburb C property to the Wife; and
(c)The Husband do all things necessary to discharge the mortgage secured against the Suburb C property at his sole expense.
The Husband seeks Orders in accordance with his Amended Response filed 4 July 2022, seeking Orders for property adjustment pursuant to section 79 of the Act and a declaration there is no Binding Financial Agreement.
The Application before the Court concerns two threshold questions for determination being:
(1)Whether the Agreement is compliant with section 90G(1) of the Act and where not whether it should be declared binding having regard to section 90G(1A) ; and if so
(2)Whether the Agreement should otherwise be set aside.
It is the Husband’s position that the Agreement is non-binding on the basis that he did not receive independent legal advice as required under s 90G(1)(b).
In the alternative, the Husband seeks to have the Agreement set aside on the following grounds:
(1)The Agreement is void for uncertainty under s 90K(b) of the Act;
(2)The parties’ subsequent conduct amounts to an abandonment of the Agreement such that it is unenforceable under the general principles of law and equity the Court must apply to his case pursuant to s 90KA.
(3)The Agreement was obtained by non-disclosure of a material matter within the meaning of s 90K(1)(a).
Part VIII of the Act prescribes that parties to a marriage have a statutory right to seek orders from the Court for a property settlement that, in all the circumstances, is just and equitable. These rights and the manner in which the Court considers what order (if any) should be made in property settlement proceedings for spouse parties are set out at section 79 of the Act. However pursuant to section 71A of the Act, Part VIII does not apply to financial matters to which a financial agreement that is binding on the parties to the agreement applies; and financial resources to which a financial agreement that is binding on the parties to the agreement applies. In effect parties may by virtue of the provisions of section 71A of the Act contract out of their statutory rights found at Part VIII to a property settlement that is just and equitable. In Stanford v Stanford [2012] HCA 52 at [41] the High Court recognised the effect of financial agreements on the powers of the Court to make an order for a property settlement stating:
If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a Court cannot make a property settlement order under s 79.
The giving away of a statutory right to a just and equitable property settlement should not be given away easily and for that reason the Legislature have included safeguards within the Act when determining whether an agreement is to be binding.
Historically the Courts have applied a rigid interpretation of section 90G. In Black & Black [2008] FamCAFC 7 the Full Court considered the provisions of section 90G as it then existed and overturned the first instance decision of Benjamin J (Black & Black [2006] FamCA 972 (15 September 2006)) who had heard an application to set aside a financial agreement on 15 September 2006. When considering the application and interpretation of section 90G (as it then existed) Benjamin J suggested the Courts should not require parties to adhere to strict compliance in order that an agreement be binding stating at [110]:
The intention of Part VIIIA is to enable ordinary people to enter into financial agreements which will deal with property and spousal maintenance and avoid the necessity of Court proceeding. The agreements can be made before marriage and after marriage, whilst the relationship subsists or they can be made following the breakdown of marriage. The explanatory memorandum observes that it is the legislative intent to encourage the use of financial agreements under this Part of the Act. To enable such agreements to be binding the legislation requires that each of the parties to the agreements must have independent legal advice. If Courts require strict interpretation of the legislation then this would have the effect of making such agreements less available to the broader community. It would positively discourage the use of financial agreements and it would limit the pool of legal practitioners who are equipped and willing to draft and/or advise in relation to such agreements. Such strict and inevitably narrow construction would add to the cost of such agreements and may put the cost to prepare and advise on them outside the financial means of the general community. That is not the legislative intent. The legislation does intend that the legal advice ought to be available Australia wide through the broad church of legal practitioners, whether specialist or not, whether in major capital cities, or in the suburbs or in the regions. Courts should not make the legal practitioners and the parties cross all of the “t’s” and dot all of the “I’s” to enter into and give effect to financial agreements. The form should not defeat the substance. The Act does not create a regime of strict compliance and there is a requirement on Courts to give purpose to legislation. Accordingly, I will not be adopting a strict interpretive approach in terms of both the construction of the legislation and construction of the terms of the agreement. I will adopt the objective approach.
The Full Court comprising Faulks DCJ, Kay & Penny JJ heard the Appeal against Benjamin J’s decision on 4 June, 2007 delivering the appeal judgement on 24 January 2008 (Black & Black [2008] FamCAFC 7). The Full Court rejected Benjamin J’s objective approach and instead considered the legislation from a safeguarding of rights perspective and in doing so allowed the Husband’s appeal setting aside the agreement stating at [45]:
Recital R and Clause 29 of the agreement … dealt predominantly with advice in relation to the legal implications of the agreement and each party’s rights and obligations. These statements did not meet all the requirements set out in sub-section 90G(1)(b), particularly there was no reference to advice in relation to whether the agreement was fair or prudent. In our view, such an omission meant that the agreement did not comply with the provisions of s.90G and was not binding upon the parties. It follows that we prefer the approach taken by Collier J in J & J (above) to that taken by the Trial Judge in this case. We are of the view that strict compliance with the statutory requirements is necessary to oust the Court’s jurisdiction to make adjustive orders under s.79.
The Full Court’s strict approach to requirements at section 90G of the Act came to the attention of the Legislature who then sought to make amendments to section 90G as set out in the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009.
The then Attorney-General and Member for Barton, being the Hon. Justice McClelland DCJ, in his Second Reading Speech to the House of Representatives made clear the government’s response to the Full Court’s decision in Black & Black while retaining the safeguard offered by the requirement for legal advice where he stated:
The bill responds to the decision of the full Court of the Family Court of Australia in Black v Black. The bill amends the Family Law Act in particular to limit the technical requirements that people need to meet to enter into prenuptial agreements, while still providing necessary protections to parties, such as the requirement to obtain legal advice. It will restore confidence in the binding nature and enforceability of financial and termination agreements under the Family Law Act. (House of Representatives, Second Reading Speech, Hansard, Thursday, 5 February 2009, p.575).
The amendments to section 90G contained within Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 became effective on 4 January, 2010.
Section 90G now reads:
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a)the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with Independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a Court.
The significance of the safeguard protections afforded by the requirement to obtain particular legal advice pursuant to section 90G(1)(b) has been strongly affirmed by the Full Court where in Kaimal & Kaimal [2020] FamCA 971, Alstergren CJ set out at [16] and [17] that:
…the requirement for legal advice is an important legislative safeguard. An effective binding financial agreement ousts the Court’s jurisdiction to make orders under Part VIII of the Act, allowing parties to deal with their assets without interference from the Court. Accordingly… S 90G(1)(b) evidences an unambiguous legislative requirement that, in order for an executed agreement to be binding, each party to a financial agreement must be given clear, independent legal advice specifically in respect to each of the matters mentioned therein.
A statement of the precise nature and standard of legal advice that is required pursuant to section 90G(1)(b) is found in Abrum & Abrum [2013] FamCA 897 where Aldridge J noted at [40] that:
In order to give advice about the effect of an agreement on the rights of a party,… a legal practitioner must establish what those rights are at the time the advice is provided… A party must know more than that some unknown or undefined right is being given up. He or she must have some idea, at least in general, of his or her previous entitlements or rights […] with he or she may compare the provisions of the proposed financial agreement.
The construction of the legislation at section 90G (and also 90UJ) is important. The section is precisely worded and provides an instructive standard not otherwise prescribed in the Family Law Act where an agreement is only binding “if and only if” certain conditions are met. The importance of the wording “if and only if” was considered by Collier J in J & J (2006) FamCA 442 at [19] and [20] where he set out:
To my mind, the words that appear in Section 90G(1) ‘if and only if’, are words of real significance. They have a meaning. The 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 with in 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…. 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.
While it is accepted that Collier J’s decision in J & J was delivered prior to the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 becoming effective it should be noted that at the time of the passing of the said Act the Legislature chose not to remove or amend the wording “if and only if”. As such it is the view of the Court Collier J’s position still has currency.
By way of background the parties commenced a romantic relationship in about 2008.
It is not controversial that following the commencement of the parties’ relationship in or about 2008 the Husband purchased a property at D Street, Suburb E for $530,000. At that time the Wife had what is best described as significant assets.
It is extremely noteworthy that Mr F solicitor of F Law Firm acted on the conveyance on behalf of the Husband for his purchase.
It is the Wife’s position the parties discuss a possible financial agreement between them on multiple occasions. The Wife deposed in her evidence that on at least one occasion the Husband said to her “I don’t care about the money. It’s not about the money for me. It’s because I love you” and agreed to sign a financial agreement.
In about 2010 the Husband moved to New Zealand for employment. The Wife moved to live with the Husband in about 2011.
The parties married in 2012 and have had 3 children together.
The parties ultimately separated on 18 May 2021.
This decision relates to a series of events and transactions around the preparation and execution of a Financial Agreement dated June 2011 being the subject of the dispute where the Husband’s solicitor acting on the financial agreement transaction failed to deliver to the Husband legal services competently and diligently (as is required by Rule 4.1.3 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015) and where both the solicitor for the Husband and the solicitor for the Wife it would appear engaged in conduct of a type that falls within the category of unsatisfactory professional conduct (discussed below).
Tendered in the proceedings and forming exhibit “A” was an unsworn statement of solicitor Mr F. Mr F had acted for the Husband on the financial agreement transaction. That statement is reproduced below:
[MS PAGANI] & [MR PAGANI] PAC6933/2021 STATEMENT OF [MR F]
1. My name is [Mr F]. I am a Solicitor and Partner of the firm, [H Law Firm], which I operate with my brother, [Mr J] and my father, [Mr K] (Dad). I have been admitted as a Solicitor since 1998. In 2011, I was employed as a solicitor at my father's firm, [F Law Firm].
2. In or around [early] 2011, I cannot now recall the exact date, [Mr L] referred [Mr Pagani] to me in relation to a Financial Agreement, proposed to be entered into between [Mr Pagani] and [Ms M].
3. I had previously met and acted for [Mr Pagani] in relation to the purchase of real property. At that time I met him face-to-face, I believe at [N Venue].
4. I do not recall whether I met with [Mr Pagani] during the preparation of the Financial Agreement. I do not believe that I did meet him in person at that time. At that point he was [working] for [O Company].
5. I recall being provided with a copy of the proposed Agreement by [Mr L]. Dad and I read it and Dad said: "I think we need to make a change to protect [Mr Pagani]'s income''.
6. I do not know whether or not Dad spoke with [Mr Pagani] on the phone. I do not recall speaking with [Mr Pagani] on the phone.
7. Dad then prepared a letter to that effect, and it was sent to [Ms Pagani’s] lawyers, [P Law Firm] [dated early] 2011. The letter proposed an amendment to the Agreement. We did not receive any response to that letter, or any further copy of the draft Agreement.
8. I do not know how the Agreement was signed. All that was ever received by our office was the Financial Agreement, amended as we had proposed, and signed by [Mr Pagani].
9. I did not receive any instructions from [Mr Pagani] in the intervening period, discuss the amended Agreement with him or provide him with advice in relation to the Agreement.
10. My hard copy file has now been destroyed, but I have retained a copy of the electronic file. Annexed hereto and marked "A" is a copy of the complete file that I hold in relation to acting for [Mr Pagani] with regard to the Financial Agreement. The file is comprised of the following:
10.1. Letter from [P Law Firm] to [Mr L] [dated early] 2011;
10.2.Draft Pre-Nuptial Financial Agreement (prepared by [Ms Pagani’s] lawyer), undated;
10.3.Letter from my father seeking an amendment to the Agreement and dated [early] 2011; and
10.4. A partially signed copy of the Pre-Nuptial Agreement.
11.The partially signed Agreement is not witnessed by me, nor is the certificate signed by me. I do not recall how I was provided with a copy of the Agreement.
Some of the matters that Mr F referred to in the statement demonstrated to the Court Mr F’s lack of recall and otherwise the fact that he did not hold a copy of the fully executed financial agreement dated June 2011, a copy of which annexed to the Wife’s affidavit filed 24 October 2022 and marked “A”. For instance at paragraph 6 of Mr F’s statement he set out that that he did not recall speaking with the Husband on the phone. Mr F then suggested in cross examination that he had spoken to the Husband on the phone when receiving the first draft of the agreement and provided the Husband with advice on the draft including advice as to the advantages and disadvantages of signing the agreement. For the reasons that a will become apparent in the decision below the Court need not consider the reliability or the issue of Mr F’s credit around whether he did or did not provide the Husband advice on the first draft of the Agreement by telephone.
It is not disputed that in early 2011 Ms Q solicitor at P Law Firm (acting for the Wife on the financial agreement transaction) wrote to the Husband’s financial manager Mr L providing to him a draft copy of a Financial Agreement. Ms Q went on to inform Mr L as to what was expected where the letter set out:
We now require from you to arrange the following:
(i) Have [Mr Pagani] peruse this agreement with his lawyer.
(ii)Provide a schedule of his financial position, so that it may be attached behind schedule 1 of the agreement and schedule 3 of the agreement.
The financial position schedule should be in the same format as [Ms Pagani’s] financial position schedule for consistency.
Once your client has agreed to the contents of the agreement and provided his financial position schedule, we will make arrangements for the execution of this agreement.
As set out in Mr F’s statement the draft Agreement was provided to Mr F by Mr L.
The Court notes that Mr F did not change his position during cross examination as set out at paragraph 5 of his statement to the effect that he and his father (Mr K) read the draft Agreement together whereupon Mr K said "I think we need to make a change to protect [Mr Pagani's] income''.
In early 2011 a letter was prepared by F Law Firm that was forwarded to Ms Q at P Law Firm. That letter was prepared under the hand of Mr K.
That letter provided:
We have provided certain advices to our client, but at present he is unwilling to execute the draft Agreement unless is may be modified.
Our client appreciates that your client has assets as per schedule which, no doubt equates to possibly over a million dollars.
Our client has not got any assets, but has a wage structure that possibly outweighs your client’s wage.
Our client believes that the Pre-Nuptial Agreement should be on the basis that your client’s assets are acknowledged and should not be touched by our client and the joint expenses should be jointly contributed, but our clients (sic) wage shall not be touched by your client.
In other words, rent, electricity, etc shall be equally contributed by both parties and your clients (sic) wage and assets and our clients (sic) wage and assets (if any) shall be individually kept without claim by either on each other.
Should your client agree to the above, we may incorporate the above into the agreement.
We look forward to your reply.
The representation in the letter that the Husband had no assets was clearly a mistake. Mr F had previously acted for the Husband undertaking the conveyancing on the purchase of D Street, Suburb E. It is a matter that the Wife would have been aware of. Mr K was otherwise clear in his letter where he sought Ms Q obtain the Wife’s instruction on the variety of issues and thereafter advise Mr K of her instructions so that Mr K could then redraft the agreement. Instead what transpired was that Ms Q sent her client a copy of a new agreement incorporating clauses that dealt with the Husband’s wage. The Wife then signed the agreement and gave it to the Husband to sign.
The circumstances of the execution of the Agreement came into sharp focus during the hearing. Extraordinary evidence was given in the proceedings by Mr F where he advised the Court that he had executed the agreement as having witnessed the Husband’s signature despite not actually seeing the Husband sign the agreement. Mr F’s evidence is set out in the cross examination below (Transcript 2.2.2023, page 43, lines 24-34):
His Honour: Just, [Mr F], so I can understand your evidence?
[Mr F]: Yes.
His Honour: The document came back executed by both the Husband and the Wife?
[Mr F]: That’s correct. Yes.
His Honour: And you then witnessed the document?
[Mr F]: Yes. That’s correct.
His Honour: You didn’t witness – you didn’t witness the Husband sign it?
[Mr F]:No. I didn’t – no, I didn’t. No. But I knew of him, your Honour, and I knew his signature from previous matters.
A solicitors falsely witnessing a documents is a serious matter. In NSW Legal Services Commissioner v Zou [2021] NSWCATOD 139 (07 September 2021) Senior Members Fairlie, Sindler and General Member Foreman found a solicitor falsely witnessing an affidavit amounted to unsatisfactory professional conduct. The Tribunal Members drew attention to the importance of the role of solicitors in properly witnessing documents stating at [72] and [73]:
72. Pressure from clients and embarrassment are not and cannot be excuses for lapses in compliance by lawyers with their professional conduct obligations and should not affect the way a solicitor’s conduct is characterised. Lawyers must “scrupulously and fearlessly [uphold their ethical obligations] from day one” (Legal Services Commissioner v Wen [2016] NSWCATOD 36 at [30]). Courts rely on lawyers and the documents submitted by them (including representations that the lawyer has properly witnessed a signature on an affidavit.).
73. The actions of the Solicitor in the way she ‘witnessed’ her client’s signature on the e-affidavit certainly fell short of the standard of competence and, particularly in this case, the diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner. There is a significant responsibility that reposes in any person who is called upon to witness a document, because in so doing that person represents to the world that he or she saw the person whose signature is being witnessed sign the document. A competent and diligent legal practitioner should not allow herself or himself to depart even momentarily from observing professional standards no matter the circumstances.
Compounding the issue of Mr F having falsely witnessed the Husband’s signature was the evidence the Husband gave where he advised the Court he had no recollection of actually signing the Agreement given during cross examination (Transcript 22.2.2023, page 16, lines 30-32):
HIS HONOUR: Can I just be clear. Did you sign that financial agreement?
Husband:I – I know it’s my signature. I don’t recall when I signed it. I have no recollection of signing it.
Counsel for the Wife pushed the Husband hard in cross examination on this point gaining at best a limited concession from the Husband that because it was his signature on the Agreement the Husband must have signed it. In any case Counsel for the Wife correctly pointed out that the Husband’s Points of Claim had not put the Husband’s execution of the agreement in issue.
Nevertheless the Court remained concerned around the issue of execution of the Agreement by the Husband particularly where Mr F had falsely witnessed the Husband’s signature. Because of that concern the Court enquired about the whereabouts of the original signed Agreement. The well less than satisfactory circumstances of the whereabouts of the original Agreement are recorded in the exchange between the Court and Counsel for the Wife below where it was conceded that no original of the signed Agreement could be provided to the Court (Transcript 22.2.2023, lines 34-42, page 17):
His HonourCan I just ask this question. I’ve seen the copy attached to your client’s affidavit; where’s the original?
Mr Othen:Excuse me a moment. The short answer is that we don’t know. As I understand it it’s not put in issue in these proceedings that that is – it’s not in the points of claim that that is not the financial agreement signed by the parties or a copy of it. So it has not really been a live issue in the proceedings. Ultimately, your Honour, I will make a submission based on….
His Honour: We don’t have an original?
Mr Othen: That’s right. That’s as I understand the position.
On the topic of the Agreement the Court notes that while there appears agreement that the executed Financial Agreement was dated June 2011 the reproduction copy that is annexed to the Wife’s affidavit filed 24 October 2022 and marked “A” is so poor that it is difficult for the Court to determine whether the Agreement was actually dated June 2011 or July 2011. Because the parties have adopted the Agreement as being dated June 2011 the Court will adopt that position.
Mr F was cross examined on the whether he had provided legal advice to the Husband on the Agreement. The Court was left confused as to Mr F’s evidence and sought to clarify his answers. For the purposes of understanding the cross examination recorded below it is important to refer the statement that Mr F had prepared that form exhibit “A” in the proceedings set out above. Paragraphs 8 and 9 of Mr F’s statement provide:
8. I do not know how the Agreement was signed. All that was ever received by our office was the Financial Agreement, amended as we had proposed, and signed by [Mr Pagani].
9. I did not receive any instructions from [Mr Pagani] in the intervening period, discuss the amended Agreement with him or provide him with advice in relation to the Agreement.
The following exchange in cross examination (Transcript 2.2.2023 page 63, lines 26-47 and page 64, lines 1-36) makes clear what advice was or was not provided by Mr F in relation to the Agreement dated June 2011:
His Honour: Can I just ask [Mr F] one question. You’ve spoken about the certificate?
[Mr F]: Yes, your Honour.
His Honour: What agreement are you talking about in the certificate? Have you got a copy of the certificate in front of you?
[Mr F]:Your Honour, is that question for me?
His Honour: It is, [Mr F]. You’ve heard Mr Ahmad take you through the certificate?
[Mr F]:Yes, that’s correct. Yes.
His Honour: What agreement are you talking about?
[Mr F]:Agreement as in what am I referring to?
His Honour: Yes:
I, [Mr F], of [R Street, Suburb S] certify that in relation to an agreement in writing, proposed to be entered into between [Ms Pagani] ..... and [Mr Pagani], I advised [Mr Pagani], my client, independently of the other party before the time at which my client signed the agreement as to the following matters. The effect of the agreement – What agreement are you – what agreement does that certificate refer to?
[Mr F]: That’s the – the financial binding agreement that was signed by all the parties, your Honour.
His Honour: How does that sit with paragraph 9 of your statement?
[Mr F]: Well, I – I understand that certificate as being the advice that was given in regards to the amended agreement.
His Honour: Just go to paragraph 9. I’m just asking these questions. I want to be very, very clear. “I do not: I do not know how the agreement was signed. The letter received by our office was a financial agreement amended as we proposed and signed by [Mr Pagani]. I did not receive any instructions from [Mr Pagani] in the intervening period discussing the amended agreement with him or provide him advice in relation to the agreement? – Yes. Paragraph 9 is correct?
[Mr F]:Yes. I did not receive any instructions from [Mr Pagani] in the intervening period to discuss the amended agreement with him.
His Honour: Or provide him with advice in relation to the agreement. In relation to the amended agreement, you never provided advice; is that right?
[Mr F]Your Honour, could you please refer – have that question again, sorry?
His Honour: So that I’m crystal clear, you didn’t provide advice in respect of the amended agreement?
[Mr F]:Once the agreement was amended, I didn’t provide any further advice thereafter.
His Honour: Have you – to be clear, “I do not know” – you say, at paragraph 8:
I do not know how the agreement was signed. All that was ever received by our office was a financial agreement amended as we proposed and signed by [Mr Pagani].?
[Mr F]: Yes, that’s correct. Yes.
His Honour: So that’s correct. And paragraph 9 is correct?
[Mr F]:Yes, and – and then once I received the agreement signed by [Mr Pagani] with the amendment, there was no further – I – I didn’t receive any further instructions from [Mr Pagani] thereafter.
Mr F could have spoken with the Husband and given legal advice on the final form of the Agreement. Mr F should have spoken with the Husband and given him legal advice on the final form of the Agreement. Had Mr F prudently done so it would have been obvious to Mr F the Agreement was incomplete and left blank Schedule 1 and Schedule 3 that were referred to at paragraphs 1.3.1 and 1.3.3 of the Agreement and that should have included the Husband’s assets and liabilities. Mr F could have then taken instructions from the Husband and sought amendments that go to all of the matters contained in Mr K’s letter dated early 2011 that went beyond just the Husbands wage “not being touched” by the Wife. Instead Mr F did not speak to the Husband and did not provide him legal advice of any sort on the final form of the Agreement. Instead Mr F just signed three things on the Agreement that he knew to be false being he witnessed the Husband’s signature, executed (but failed to date) the certificate of legal advice and also falsely witnessed the Husband’s signature on the Receipt contained at the last page of the Agreement that provided that after the Agreement had been had signed the Husband had been provided a copy of the Agreement.
Despite submission by Counsel for the Wife (transcript, 22 February 2023, lines 25-35 page 96), Mr F’s failure was not a technicality. Mr F’s failure was a dereliction of his duty to deliver to the Husband legal services competently and diligently and protect his client’s rights.
Section 90G(1)(b) is a safeguard. Section 90G(1)(b) was not complied with where before signing the Agreement the Husband was not provided with independent legal advice from a legal practitioner about the effect of the Agreement on the rights of the Husband about the advantages and disadvantages, at the time that the advice was provided, to the Husband of making the Agreement.
Mr F’s evidence given during cross examination that once he received the Agreement signed by the Husband he did not receive any further instructions from the Husband thereafter (Transcript 2.2.2023 page 64, lines 34-36) also makes clear that the provision of 90G(1)(c) not complied with where that section requires:
(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);
During final submissions by Counsel for the Wife (transcript, 22 February 2023, lines 25-35 page 96) it was put:
I will say, if your Honour is – if your Honour comes to the view that technically the advice was not given on the final form of the agreement, if your Honour forms that view – despite what I’ve said, we can see what a technicality that would be in this particular case because the final form of agreement was the original draft plus the very clauses [Mr Pagani] wanted added. So it’s not as though he didn’t get advice on those – on the clauses or the advice on the original form of agreement. He did, we say. And if you’re satisfied about that, it would be a mere technicality because what advice would he have given? “Well, they put in the clauses I asked for. We’re good to go”. So if you get to that point – which in my respectful submission you wouldn’t, but if you get to that point – and that’s – and that’s the basis of not accepting that section 92 (transcript incorrect and should read section 90G) has been complied with, it would definitely be unjust and inequitable not to declare the agreement binding over such a technicality.
The power of the Court to find that an agreement is binding where the provisions of section 90G(1) have not be complied with where it would be unjust and inequitable not to do so is found at section 90G(1A) of the Act.
Section 90G(1A) of the Act provides that a financial agreement is binding on the parties to the agreement if:
(a)the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a Court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made)
Section 90G(1A) requires the Court to consider and determine whether it is satisfied it would be unjust and inequitable if the Agreement were not binding on the parties.
When considering the Wife’s claim for equitable relief pursuant to section 90G(1A) it is appropriate the Court consider the ‘clean hands’ doctrine that is based on the maxim of equity which provides that one who comes to equity must come with clean hands.
The High Court confirmed the application of clean hands doctrine in CGU Insurance Limited v AMP Financial Planning Pty Ltd [2007] HCA 36 at [257] where it held:
….an absence of clean hands according to equitable doctrine which requires that a plaintiff seeking relief not himself be guilty of tainted relevant conduct. We have referred to the doctrine of clean hands because, as with another equitable doctrine, that he who seeks equity must do equity, it invokes notions of reciprocity….
The Court considers the Wife did not come to this Court seeking equity with clean hands. The Agreement signed by the Wife and her solicitor (whenever that may have been) was executed at a time when the Agreement was incomplete and failed to set out the Husband’s assets and liabilities including the home the Husband owned. Schedule 1 and Schedule 3 were left blank. The Wife was in a relationship with the Husband and would have known he purchased and owned the home at D Street, Suburb E and would have had some other property and liabilities even if it was $2 in the bank and $100 owed on a credit card. Schedule 1 and Schedule 3 of the Agreement should not have been left blank. It is the Courts position that Ms Q knew full well that the Husband needed to provide his statement of assets and liabilities. It is for that reason that Ms Q set out in her letter dated early 2011:
Provide a schedule of his financial position, so that it may be attached behind schedule 1 of the agreement and schedule 3 of the Agreement….The financial position schedule should be in the same format as [Ms Pagani’s] financial position schedule for consistency. Once your client has agreed to the contents of the agreement and provided his financial position schedule, we will make arrangements for the execution of this Agreement.
Feigning ignorance or taking advantage of the Husband’s position where the firm of solicitors acting on his behalf were clearly mistaken when they suggested in their letter to Ms Q early 2011 that he did not own any property is not sufficient. Rule 30.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 provides:
30.1 A solicitor must not take unfair advantage of the obvious error of another solicitor or other person, if to do so would obtain for a client a benefit which has no supportable foundation in law or fact.
The solicitor’s for the Wife should have forwarded the amended Agreement to Mr F for review after they had made amendments to it. Instead the solicitor for the Wife sent the Agreement to the Wife for execution in New Zealand and the Wife just gave it to the Husband. At paragraph 19 of the Wife’s affidavit filed 24.10.2022 she deposes:
In or around June 2011, [Ms Q] sent me a copy of the final BFA for signature. I was residing with [Mr Pagani] in New Zealand at the time and recall signing the BFA in New Zealand and providing the copy I had signed to [Mr Pagani]. I understood [Mr Pagani] would sign the BFA and then post the signed BFA to his lawyer.
The Court notes that the Wife’s signature on the Agreement was witnessed by the Wife’s solicitor, Ms Q of T Street, Suburb U. While Ms Q was not called to give evidence, the Wife’s evidence at paragraph 19 of her affidavit is such that the Court is able to find Ms Q (like Mr F), had falsely witnessed the her client’s signature.
There is no evidence from the Wife as to how the Agreement ended up in the hands of Mr F. Mr F gave the following evidence in cross examination (Transcript 2.2.2023, lines 28-38, page 36) on the topic:
Mr Ahmad: So you’re now telling his Honour that – well, just stopping there. At paragraph 8, you say:
“I don’t know how the agreement was signed. All that was ever received by our office was the financial agreement amended as we had proposed and signed by [Mr Pagani].”
Mr Ahmad: So I’m sorry. That’s your evidence?
[Mr F]: Yes. That’s correct, yes.
Mr Ahmad: So you don’t know how it was signed?
[Mr F]:No. No. Because [Mr Pagani]– at that stage, the client was overseas and we received, from what I recall, it was a digital version signed by him.
Given Mr F’s evidence, the Agreement that he witnessed and signed would have only had copies of the signature of the Husband the Wife. It would appear that Mr F did not even falsely witness the Husband’s original signature. It is unknown what copy of the Agreement was falsely witnessed by Ms Q or how or at what point in time the Agreement came into her possession to be witnessed. The Court asked Counsel for the Wife where the original of the Agreement was and was advised by Mr Othen of Counsel, on instructions, “we don’t know”. The Wife and her solicitor should have and in the view of the Court would have known that there was a problem with the Agreement in that it was not complete and the execution flawed where original signatures would have been mixed with copies. Instead of being prudent, instead of Ms Q acting competently and diligently going back to Mr F and suggesting something along the lines of “this is not good enough….we need to get this right so that it is binding on the parties. Include the Husband’s assets and liabilities….insert the information required at Schedule 1 and Schedule 3, let’s execute and witness it properly and let’s get this right”, the Wife and her solicitor adopted an attitude that in the view of the Court was one of ‘that’ll do’ or ‘near enough is good enough’. Near enough is not good enough and the Wife does not come to this Court with clean hands. The circumstances of the execution of the Agreement by the parties and their solicitors acting as witnesses is nothing short of diabolical. The Wife comes to the proceedings seeking equity with well less than clean hands. Any suggestion the Wife has a claim to the benefit of paragraph 90G(1A) is rejected.
For the reasons set out above the Court makes the following Orders:
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Myers. Associate:
Dated: 30 June 2023
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