Parker & Parker
[2010] FamCA 664
•3 August 2010
FAMILY COURT OF AUSTRALIA
| PARKER & PARKER | [2010] FamCA 664 |
| FAMILY LAW – PROPERTY – FINANCIAL AGREEMENT – application by the wife seeking to have a financial agreement set aside on the basis that it does not comply with the provisions of s 90G of the Family Law Act 1975 (Cth) – where amendments were made to the financial agreement by the husband’s solicitor after the wife had signed the agreement – where the wife initialled the amendments – where no change was made to the certificate provided by the wife’s solicitor – whether each party was provided with independent legal advice as required by s 90G(1)(b) – whether the agreement is binding pursuant to s 90G(1A) – consideration of the meaning of “unjust and inequitable if the agreement were not binding” in s 90G(1A)(c) – declaration that the financial agreement between the parties is not binding within the meaning of the Family Law Act |
| Family Law Act 1975 (Cth) ss 4, 71A, 79, 90C, 90G, 90K & 90KA Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) Schedule 5, Part 1 item 8 Federal Justice System Amendment (Efficiency Measures) Bill (No 1) 2008 (Cth) |
| Australasian Performing Right Association Ltd v Austrama Television Pty Ltd [1972] 2 NSWLR 467 Black and Black (2008) FLC 93-357 Fevia & Carmel–Fevia (2009) FLC 93-411 Issa v Berisha [1981] 1 NSWLR 261 Kostres & Kostres (2009) FLC 93-420 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Pukallus v Cameron (1982) 180 CLR 447 Ruane & Bachmann-Ruane and Anor [2009] FamCA 1101 Ruzic & Ruzic [2007] FamCA 473 Ryledar Pty Ltd & Anor v Euphoric Pty Ltd (2007) 69 NSWLR 603 |
| APPLICANT: | Ms Parker |
| RESPONDENT: | Mr Parker |
| FILE NUMBER: | ADC | 502 | of | 2008 |
| DATE DELIVERED: | 3 August 2010 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 16 September 2009 21 December 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Berman |
| SOLICITOR FOR THE APPLICANT: | Mark Esau |
| COUNSEL FOR THE RESPONDENT: | Mr Heinrich & Mr Jordan |
| SOLICITOR FOR THE RESPONDENT: | David M Davidson |
Orders
It be declared that the financial agreement between the applicant and the respondent dated 11 November 2004 is not binding within the meaning of the Family Law Act 1975.
IT IS NOTED that publication of this judgment under the pseudonym Parker & Parker is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 502 OF 2008
| MS PARKER |
Applicant
And
| MR PARKER |
Respondent
REASONS FOR JUDGMENT
Introduction
I have before me an Amended Application for Final Orders filed by the wife on 3 March 2009 in which she seeks, inter alia, that a financial agreement entered into between the husband and the wife pursuant to s 90C of the Family Law Act1975 (Cth) (‘the Act’) be set aside.
The wife seeks that this agreement be set aside on the basis that it does not “comply” with the provisions of s 90G of the Act.
It is the husband’s position that the agreement does “comply” with the provisions of the Act, and in the alternative that the agreement can be rectified to ensure such compliance, and that in any event it should be binding on the parties pursuant to the provisions of s 90G(1A).
Background
The husband was born in 1961 and is now aged 48 years.
The wife was born in 1962 and is now aged 48 years.
According to the wife, the parties commenced cohabitation in 1979.
The parties married in November 1985.
The parties’ daughter C was born in 1986 and is now aged 24 years.
The parties’ daughter N was born in 1989. N is now deceased.
The parties’ son S was born in 1993 and is now aged 17 years.
The parties separated for the first time on 16 April 2004 when the wife left the former matrimonial home at B.
On 22 April 2004 the wife instructed a solicitor to advise her.
On 12 October 2004 the wife’s solicitor received from the husband’s solicitor a proposed Financial Agreement. The wife’s solicitor advised the wife that the agreement was unfair and that she should not sign it. Despite this advice the wife determined to proceed with the agreement.
On 5 November 2004 the wife again met with her solicitor. Changes were made in hand by the wife’s solicitor to paragraphs 1 and 11 of the agreement. The wife’s solicitor also had typed a list of furniture, furnishings and effects and this became Schedule C to the agreement. The wife then signed the agreement, witnessed by her solicitor. The wife’s solicitor signed the lawyer’s certificate on page 15 of the document and the wife signed the acknowledgment also on page 15.
On 8 November 2004 the solicitor for the wife returned the signed Agreement to the solicitor for the husband.
On 11 November 2004 the husband attended upon his solicitor. A further hand written amendment was made to clause 15 of the agreement. This amendment added paragraph (b) to clause 15 as follows:
(b) Forthwith upon the parties resuming cohabitation [the husband] shall pay the sum of $10,000 and [the wife] the sum of $60,000 into and in reduction of the joint Westpac Equity Access account.
The husband then signed the agreement. The husband’s solicitor signed the lawyer’s certificate on page 14 of the document and the husband signed the acknowledgment.
On 11 November 2004 the solicitor for the husband sent the agreement, now signed by the husband, to the solicitor for the wife, requesting that the wife initial the amendment made by the husband and return the document, retaining a copy.
On 12 November 2004 the wife met with her solicitor. The amendments made to clause 15 by the solicitor for the husband were initialled by both the wife and her solicitor. No change was made to the certificate provided by the wife’s solicitor attached to the deed at page 15 and dated 5 November 2004.
On 12 November 2004 the solicitor for the wife returned the agreement to the solicitor for the husband.
According to the husband the parties finally separated in May 2007.
On 8 February 2008 the wife filed an Application for Final Orders in the Family Court seeking, inter alia, that the agreement entered into between the parties be set aside.
On 30 June 2008 the husband filed a Response to the Application for Final Orders seeking an order that the wife’s application be dismissed.
On 3 March 2009 the wife filed an Amended Application for Final Orders seeking the same orders but naming as further respondents the parties’ children C Parker and S Parker, and a company Parker Pty Ltd.
On 1 April 2009 the fourth respondent Parker Pty Ltd filed a response seeking an order that the “application filed on 3 March 2009 as against the fourth respondent be dismissed”.
On 9 April 2009 a Notice of Address for Service was filed on behalf of the second respondent, C Parker.
On 8 May 2009 a Notice of Address for Service was filed by the Public Trustee as the Case Guardian for the third respondent, S Parker.
On 24 July 2009 counsel for the second respondent and counsel for the third respondent advised the Court that those respondents would not be taking any part in the proceedings and would neither be attending nor be represented at the hearing of the application.
On 29 July 2009 there was no attendance by or on behalf of the fourth respondent and the Court was informed by the counsel for the husband that the fourth respondent would not be taking any part in the proceedings and would not be represented at the hearing.
On 16 September 2009 the matter came before me for hearing and I reserved my judgment.
On 7 December 2009 the Federal Justice System Amendment (Efficiency Measures) Bill (No 1) 2009 (Cth) received Royal Assent, with the amendments to the provisions of the Family Law Act 1975 dealing with financial agreements (contained in Schedule 5 of the amending Act) to commence on 4 January 2010.
I listed the matter on 21 December 2009 to deliver my reasons for judgment. However, counsel for the husband then sought an adjournment of the matter until after 4 January 2010. This was opposed and I adjourned the matter to hear argument on the husband’s application.
On 21 December 2009 the husband formally filed an Application in a Case seeking that the trial “be re-opened and re-argued having regard to the amendments which were to take effect from 4 January 2010.”
On 31 December 2009 I heard the husband’s application and adjourned the proceedings to enable them to be re-opened in light of the amendments.
On 21 January 2010 I heard further submissions from counsel and further reserved my judgment.
The Law
The provisions with respect to financial agreements are found in Part VIIIA of the Act.
Pursuant to s 90C, parties to a marriage may enter into a financial agreement during their marriage with respect to how their property or financial resources are to be dealt with in the event of the breakdown of the marriage and/or with respect to maintenance.
As alluded to above, the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 introduced amendments to the provisions of the Family Law Act 1975 dealing with financial agreements. These amendments addressed, inter alia, concerns regarding the provisions of Part VIIIA of the Act in light of the Full Court decision in Black and Black (2008) FLC 93-357 and were intended to relax certain technical requirements for financial agreements to be binding. Indeed, in the second reading speech of the Attorney-General dated 3 December 2008 when introducing the amending legislation into Parliament, it was said that:
...
The bill amends the Family Law Act to ensure that people who have made an informed decision to enter into one of these agreements cannot later avoid or get out of the agreement on a mere technicality, resulting in court battles that the agreement was designed to prevent.
The amendments commenced on 4 January 2010 and they are retrospective.
Section 90G sets out the requirements for a financial agreement to be binding on the parties. Prior to the introduction of the amendments, it provided:
(1) 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) the agreement contains, in relation to each spouse party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d) the agreement has not been terminated and has not been set aside by a court; and
(e) after the agreement is signed, the original agreement is given to one of the spouse parties and a copy is given to each of the other parties.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
Section 90G now provides:
(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.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995 .
(1A) 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); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
Schedule 5, Part 1 item 8 of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 contains the relevant transitional provisions with respect to the amendments to s 90G. Items 8(6) and (7) provide:
(6) For a financial agreement made before the commencement of this item, paragraphs 90G(1)(c) and (ca) of the Family Law Act 1975, as inserted by item 2 of this Schedule, do not apply.
(7) For a financial agreement made before the commencement of this item, paragraph 90G(1A)(b) of the Family Law Act 1975, as inserted by item 4A of this Schedule, does not apply and the following paragraph 90G(1A)(b) of that Act is taken to have been inserted by that item and to apply instead:
(b)paragraph (1)(b) is not satisfied in relation to the agreement; and
As is made clear by these provisions, s 90G(1)(c) and (ca) thus have no application to this matter. For the financial agreement to be binding on the parties in this case, subject to subsection (1A), only paragraphs 90G(1)(a), (b) and (d) must be satisfied. However, if s 90G(1)(b) is not satisfied then the agreement can still be binding if s 90G(1A)(c) is satisfied.
Section 90K details the circumstances in which the Court may set aside a financial agreement or termination agreement.
Section 90KA deals with the “Validity, enforceability and effect of financial agreements and termination agreements” and provides:
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; and
(c) in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
It is also relevant to refer to s 71A in Part VIII of the Act. That section provides:
(1) This Part does not apply to:
(a)financial matters to which a financial agreement that is binding on the parties to the agreement applies; or
(b)financial resources to which a financial agreement that is binding on the parties to the agreement applies.
(2) Subsection (1) does not apply in relation to proceedings of a kind referred to in paragraph (caa) or (cb) of the definition of matrimonial cause in subsection 4(1).
Thus, importantly, the Court’s power to make an order for property settlement pursuant to s 79 of the Act is removed in respect of “financial matters” to which a “financial agreement” applies if that “financial agreement” is binding. The expressions “financial matters” and “financial agreement” are defined in s 4 of the Act as follows:
"financial agreement" means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante-nuptial or post-nuptial settlement to which section 85A applies.
"financial matters" means:
(a) in relation to the parties to a marriage--matters with respect to:
(i) the maintenance of one of the parties; or
(ii) the property of those parties or of either of them; or
(iii) the maintenance of children of the marriage; or
(b) in relation to the parties to a de facto relationship--any or all of the following matters:
(i) the maintenance of one of the parties;
(ii)the distribution of the property of the parties or of either of them;
(iii)the distribution of any other financial resources of the parties or of either of them.
The terms of the financial agreement
There are a number of aspects of the agreement entered into by the parties which are relevant to the determination of the wife’s application and whether the agreement complies with the provisions of s 90G of the Act.
Firstly, at Recital K to the agreement, both parties acknowledge they had been legally represented in the following terms:
K.(a) [The husband] has been represented by David Cameron Burrell, Solicitor in relation to this Deed and the negotiation, preparation and execution of same.
(b)[The wife] has been represented by Rosemary Cardone, Solicitor in relation to this Deed and the negotiation, preparation and execution of same.
At clauses 26 and 27 of the agreement:
“26.[The husband] acknowledges that he has had legal advice on the provisions of and effect of this Deed from David Burrell, Solicitor.
27.[The wife] acknowledges that he has had legal advice on the provisions of and effect of this Deed from Rosemary Cardone, Solicitor.” (Original emphasis)
The lawyers’ certificates to the agreement are found at pages 14 and 15 of the deed. The certificate provided by the solicitor for the husband is dated 11 November 2004 and is in the following terms:
“I, HEREBY CERTIFY that I have explained to the husband in relation to the deed to which this certificate is attached at his request: -
1.His rights and responsibilities in the absence of this Deed.
2.The manner in which those rights and responsibilities are or may be affected by this Deed.
3.The advantages and disadvantages to him in entering into this deed.
…”
There is an identical certificate with respect to the wife. This certificate is dated 5 November 2004.
Submissions
Submissions of the wife
At the initial hearing on 16 September 2009 it was submitted on behalf of the wife that the financial agreement was not binding as it did not “comply” with the provisions of s 90G of the Act at that time. Counsel for the wife, Mr Berman, relied on the authority of Black and Black (supra) in which the Full Court determined that strict compliance with the statutory provisions is required.
It was submitted on behalf of the wife that the agreement between the parties fell far short of what was then required by s 90G of the Act in two respects. Firstly, it did not contain the relevant statement as was then required by s 90G(1)(b). Secondly, it did not annex a certificate appropriately provided by the wife’s solicitor.
Counsel for the wife argued that there was nothing in the recitals to the agreement or in the agreement itself which contained the relevant statements about the legal advice provided to the parties. It was submitted that the closest the agreement came was at clauses 26 and 27, which have been outlined above. It was submitted that these clauses fell short of the obligation under s 90G, however, and were merely bald assertions that advice was received by the parties. Counsel for the wife contended that the certificates could not themselves form part of the agreement, so as to meet the requirements of s 90G(1)(b). It was also submitted that the agreement did not contain any statement which “imported” or linked the certificates to the agreement. It was also the wife’s position that the issues in dispute here were not capable of rectification.
With respect to the certificate provided by the wife’s solicitor, it was submitted on behalf of the wife that without recertification with respect to the advice provided following the wife initialling the amendments to the agreement on 12 November 2004, there had not been strict compliance with s 90G. It was submitted that without such recertification there was uncertainty as to whether the requisite matters were discussed and the necessary advice given.
Mr Berman submitted that the amendments to s 90G do not overcome all of the defects in the agreement of 11 November 2004. Mr Berman contended that s 90G still has an aspect of “strict compliance” as the words “if, and only if” remain at the beginning of s 90G(1).
The focus of the wife’s submissions at the hearing on 21 January 2010 was the requirement in new s 90G(1)(b) that independent legal advice is to be provided to each party before the agreement is signed. Indeed Mr Berman submitted that what is now required is that each party be provided with the appropriate legal advice and be informed that the other party has received that advice before either party signs the agreement. And, in this case Mr Berman says that there is no evidence to establish that these requirements were satisfied either in relation to the husband or the wife.
For my part I do not agree with this interpretation of s 90G(1)(b). I consider that it is an illogical interpretation given the intention of the amendments to limit the technical requirements that need to be met to create a binding agreement. I consider that the paragraph simply requires that each party receive the appropriate advice before that party signs the agreement. However, even on that interpretation Mr Berman’s submission is that there is insufficient evidence of compliance in this case. It is still the wife’s position that the amendments made by the husband on 11 November 2004 to clause 15 of the agreement were significant and placed new obligations on the parties, namely requiring both parties to make payments to reduce the balance of a specified account. It is submitted that the wife was faced with a new and different agreement following these unilateral amendments made by the husband, and it was necessary that she receive specific legal advice about this.
However, it is said, there is insufficient evidence to establish that before initialling the amendments she received that advice. Certainly there was no new certificate provided by Ms Cardone and although the husband submitted that that was as a result of “inadvertence” the wife says that it was evidence of an absence of advice.
Mr Berman also submitted that not only was there insufficient evidence to establish that the wife had received the necessary legal advice, but that was also the position with the husband. Neither the relevant terms of the agreement nor the certificate of Mr Burrell indicate positively that the legal advice was given before the signing of the agreement. And, unlike the wife and her solicitor, neither the husband nor his solicitor were called to give oral evidence on this topic or at all. Thus, Mr Berman says that this is an added reason why s 90G(1)(b) is not satisfied here.
I observe that Mr Berman also submitted that on the facts of this case paragraphs 90G(1)(c) and (ca) are also not satisfied, but he overlooked that as a result of the transitional provisions these paragraphs do not apply here.
On the basis that s 90G(1)(b) has not been satisfied, it is then necessary to consider whether the agreement is still binding under s 90G(1A), and the specific issue is whether paragraph (c) can be satisfied. Mr Berman contended that this paragraph requires the Court to consider the efficacy of the settlement and the entitlements that the parties are to receive pursuant to the agreement. However no evidence was presented to the Court regarding the respective positions of the parties, and thus the Court could not be satisfied of the matters outlined in paragraph (c). In this regard, Mr Berman highlighted the failure on the part of the husband to put any further evidence before the Court after seeking an adjournment and the reopening of the trial.
Mr Berman also maintained that even after the amendments s 90KA still has no role in providing a remedy for non-compliance with s 90G and the obligations under the Act. Prior to the amendments the relevant authority was the decision of Murphy J in Fevia & Carmel–Fevia (2009) FLC 93-411 where his Honour held, in my view correctly, that s 90KA has no application to s 90G. Mr Berman submitted that the amendments do not change this position. Indeed, the reference in s 90G(1C) to the application of s 90KA is quarantined to s 90G(1B) and s 90G(1A)(d), namely to an enforcement application, and does not lead to the application of s 90KA in determining whether a financial agreement is binding on the parties.
Submissions of the husband
At the hearing on 16 September 2009, counsel for the husband, Mr Heinrich, submitted that the requirements of s 90G (at that time) had been met, but that in the alternative the agreement could be rectified to ensure compliance with s 90G. Firstly, it was submitted that s 90G(1)(b) did not require that the relevant statement must be in the operative part of the agreement, and that the certificates annexed to the agreement form part of the agreement and were sufficient to satisfy s 90G(1)(b).
Mr Heinrich conceded that clauses 26 and 27 of the agreement, without more, were insufficient to meet the requirements of s 90G(1)(b).
It was submitted in the alternative that the agreement could be rectified to ensure compliance with s 90G. With respect to the issue of rectification, Mr Heinrich referred me to the authorities of Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] 69 NSWLR 603, Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, Pukallus v Cameron (1982) 180 CLR 447, Issa v Berisha [1981] 1 NSWLR 261, Australasian Performing Right Association Ltd v Austrama Television Pty Ltd [1972] 2 NSWLR 467 and a decision of the Family Court, Ruzic & Ruzic [2007] FamCA 473.
I also observe that Mr Heinrich submitted that s 90KA was of relevance in this case, and he suggested that this case could be distinguished from the decision of Fevia & Carmel-Fevia (supra).
It was submitted on behalf of the husband that there was a common intention of the parties to enter into an agreement to achieve an outcome, which the agreement failed to achieve. It was submitted the parties had the intention that they would be bound by the agreement, and in those circumstances the agreement could be rectified to achieve that outcome. Mr Heinrich submitted that this common purpose or intention could be achieved either by adding words to clauses 26 and 27 of the agreement sufficient to meet the requirements of s 90G(1)(b), or adding a further clause or recital to the agreement.
It was further submitted that the date of the certificate provided by the wife’s solicitor could likewise be rectified. Mr Heinrich contended that it was not in doubt that the wife’s solicitor could have provided another certificate on 12 November 2004, with this date. It was contended that the failure to amend the date of the certificate at the time the wife and her solicitor initialled the amendments on 12 November 2004 was an “inadvertent omission”.
At the hearing on 21 January 2010 Mr Jordan indicated that he was “not abandoning” the submissions made by Mr Heinrich that the agreement could be rectified to ensure compliance with s 90G, but he did not make any submissions as to how that remedy would apply given the amendments to the Act. It is obviously no longer necessary to consider whether the repealed s 90G(1)(b) has been satisfied and thus rectification of the agreement to overcome the defects in that regard is also no longer relevant. However the issue of the certificate provided by Ms Cardone is still in issue given that it is necessary to determine whether the requisite legal advice had been given before the agreement was signed.
Mr Jordan though, to repeat, said nothing about this. Instead, he submitted that the “defects” of the agreement had been cured by the introduction of the amending Act. He identified that the issue now is whether the failure of the wife’s solicitor to provide a further certificate after the amendments to the agreement is fatal to the agreement being binding on the parties, on the basis that there is then no formal indication in the documentation that the appropriate legal advice was given before the agreement was signed. It was submitted in this respect that the wife is thereby relying on an omission of her own solicitor to avoid being bound by the financial agreement. Mr Jordan argued that on that basis the wife is seeking to rely on a technicality, whereas the intent of the amendments was to remove such technicalities as a reason for an agreement to not be binding.
Mr Jordan submitted that it was clear from the evidence of the wife’s solicitor (and the wife) that the wife was provided with fulsome advice and that she understood that she was making a valid agreement. Thus, he says that s 90G(1)(b) has been complied with and the agreement is binding.
However, if that is not the case, and it is necessary to consider s 90G(1A)(c), Mr Jordan contended that the “unjust and inequitable” requirement of that paragraph invites the Court to refer back to the nature of the complaint, not the efficacy of the agreement as submitted by Mr Berman. Mr Jordan submitted that the provision requires the Court to look at the justice and equity of the circumstances surrounding the making of the agreement. In this regard, Mr Jordan argued that the wife cannot now “unravel” the agreement on the basis of a “technicality”, in light of evidence that the wife understood the agreement and Ms Cardone’s evidence regarding the advice provided to her.
It was submitted that if Mr Berman’s submission was accepted regarding the need for the Court to be satisfied that the agreement was just and equitable, it would return the Court to a situation akin to the approval of old s 87 agreements, which is not the intent of the legislature.
The issues for determination
It is not in doubt that the parties signed the agreement as required by s 90G(1)(a), and that the agreement has not been terminated or set aside by a court (s 90G(1)(d)). As is made clear by the transitional provisions of the amendments, the requirements of s 90G(1)(c) and 90G(1)(ca) do not apply to financial agreements made prior to the commencement date. The two issues for determination are therefore as follows:
(1)Was each party, before signing the agreement, 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 (s 90G(1)(b))?
(2)In the event that paragraph (1)(b) is not satisfied, would it be unjust and inequitable if the agreement were not binding on the parties? Is the financial agreement binding on the parties pursuant to s 90G(1A)?
Discussion
(1) Was each party, before signing the agreement, 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 (s 90G(1)(b))?
Section 90G(1)(b) requires that each party, before signing the agreement, received 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. Each party is then to be provided with a statement by the legal practitioner stating the advice referred to in paragraph (b) was provided. This can occur before or after the agreement is signed, however.
The primary issue in this case is whether the wife was provided with advice from her solicitor regarding the effect of the agreement on her rights and the advantages and disadvantages of making the agreement following the amendments made to the agreement by the husband and his solicitor on 11 November 2004, after the wife had initially signed the agreement and her solicitor had signed the lawyer’s certificate on page 15 of the agreement.
On 12 November 2004 the wife attended upon Ms Cardone. Both the wife and Ms Cardone state that they initialled the amendments made by the husband to clause 15 on this date.
The wife in her affidavit filed on 14 April 2008 says with respect to the amendments made and her attendance upon Ms Cardone on 12 November 2004:
77.At the foot of page 8 of the Agreement there are handwritten amendments to the Agreement.
78.I believe the husband’s solicitor Mr Burrell made the amendments after the Agreement was returned to him by Ms Cardone by letter dated 8 November 2004.
79.I attended at the office of Cardone & Associates on or about 12 November 2004 and initialled the amendments.
80.A new Lawyer’s certificate was not signed by Ms Cardone nor were any of the matters referred to in the first Lawyer’s Certificate explained to me in relation to the amended version of the Agreement.
81.In addition I did not sign a new “Wife’s Acknowledgment” in relation to the amended version of the Agreement.
In cross examination by counsel for the husband, Mr Heinrich, the wife gave the following evidence with respect to her attendance upon her solicitor on 12 November 2004:
As I understand it, Ms [Parker], you had a second visit upon Ms Cardoni [sic] at which you saw, for the first time, the handwriting that appears in relation to clause 15?‑‑‑Yes.
And you read those words at that time?‑‑‑Well, I assume I did. I would have.
And you’ve put your initials next to those words, haven’t you?‑‑‑Yes.
And at that point in time, was it the case that you agreed with all of the terms of this document?‑‑‑At that point, yes.
And it was your intention on that day when you saw that clause 15, that you were wanting to enter into an agreement with Mr [Parker] that dealt with the issues of property settlement; is that right?‑‑‑Yes.
And you understood that your lawyer and the lawyer for Mr [Parker] were doing whatever was necessary to create a proper valid agreement about that; is that right?‑‑‑At the time, yes.
And on the day when you put your initials next to the handwriting of clause 15, Ms Cardoni [sic] had a discussion with you about what she thought those words meant; is that right?‑‑‑I don’t recall.
If I say that she did have such a discussion, do you deny that, or you just simply can’t remember?‑‑‑I can’t remember.
You had a discussion with her for about 20 minutes on the day when you initialled those amendments to clause 15, didn’t you?‑‑‑I don’t remember how long it was.
Well, it wasn’t a short meeting where you just went in, initialled and then left immediately, was it?‑‑‑I thought it was actually.
You thought it was that short?‑‑‑Yes, I thought it was only a short one just to sign it, and ‑ ‑ ‑
But now, I’m trying to distinguish between an occasion when a person such as you might simply go into a room and see a person and look at a document and initial it and leave, which might take 30 seconds, and an occasion when there’s actually a discussion about the document and some to and fro in conversation about what was happening?‑‑‑No, very little was discussed about that.
If Ms Cardoni [sic] says that there was a conversation that went from about 9.50 am until 10 am that day with you, which was then interrupted and then resumed again at about 10.20, and went till about 10.45, would you agree with that?‑‑‑This is back in 2004?
Yes. I’m not saying that you should or shouldn’t remember. I’m just asking if it was the case that on 12 November, when you met with Ms Cardoni [sic]‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ the meeting was in two phases in the sense there was a meeting for about 10 minutes that was interrupted at about 10 am. Do you recall whether you had a meeting with her that was interrupted for a while?‑‑‑I don’t recall that.
And then I’m suggesting it resumed again about 10.20 am and went until about 10.45 am?‑‑‑I don’t recall that.
You don’t recall?‑‑‑No, I’m sorry.
And I suggest that during the course of those times that I’m suggesting you had with Ms Cardoni [sic], she discussed with you the amendments that had been made to clause 15?‑‑‑That would have been discussed because I’ve signed it, but into what detail, I don’t remember.
Thank you. And you expected, did you, at the end of that meeting, that Ms Cardoni [sic] was going to be sending the document back to the solicitor for Mr [Parker]?‑‑‑Yes, I did.
And you thought that was going to happen because from your point of view, you were intending to have, at that stage, a valid agreement concerning property rights and so on for family law purposes?‑‑‑Well, that was so I could cohabitate again.
But you agree with me, you were intending, by what you did on that day, to have done what you needed to do to create a valid agreement?‑‑‑Yes.
And whatever was printed on the document had really been at the suggestion of your lawyer or – the actual words had been at the suggestion of your lawyer or the other lawyer; is that right?‑‑‑The other lawyer.
Yes. So I mean, you, yourself, didn’t have any input in decide what actual words appeared on what page, did you?‑‑‑No, definitely not.
[Transcript of proceedings, 16 September 2009 at pg 16 line 7, Emphasis added]
In her affidavit filed on 12 March 2009 Ms Cardone says:
11. When I received the agreement I noticed that Mr Burrell had amended the Agreement by inserting by hand the following words at the foot of page 8:
“(b)Forthwith upon the parties resuming cohabitation [the husband] shall pay the sum of $10,000 and [the wife] the sum of $60,000 into and in reduction of the joint Westpac Equity Access account”.
12. These words were not in the Agreement when I discussed it with the applicant and we signed it on 5 November 2004.
13. I met with the applicant on 12 November 2004 when she and I initialled the amendments made by Mr Burrell appearing at page 8 of the agreement.
In cross examination by counsel for the husband Ms Cardone gave the following evidence:
And so if you look at the agreement. I think clause 15, which I think appears on page 8, there’s some handwriting at the bottom?‑‑‑Yes. Yes.
So do you recall getting the agreement back from Mr Burrell and it had the handwriting that you saw for the first time?‑‑‑Yes.
And in your affidavit, if I could just look at – ask you to look now at paragraph 13, which I wish to ask you some questions about ‑ ‑ ‑ ?‑‑‑Yes.
‑ ‑ ‑ you’ve said in paragraph 13 – I’ll just read it out, your Honour:
I met with the applicant on 12 November 2004 when she and I initialled the amendments made by Mr Burrell appearing on page 8 of the agreement.
See that?‑‑‑Yes.
And then in paragraph 14, you refer to an exhibit which is a letter you then sent to Mr Burrell on 12 November, if you see that exhibit: RC3. You’ll see it’s a short letter that says:
I refer to your letter of 11 November. I now return the agreement for your – with your alteration to 15(b) initialled by my client and me. Yours faithfully.
?‑‑‑Yes.
Now, is this the case that at the time you sent or arranged for that letter of 12 November to be sent to Mr Burrell, you believed that you’d done everything necessary to create a valid financial agreement under the Act – the Family Law Act?‑‑‑The agreement was created by Mr Burrell – was prepared by Mr Burrell, and sent to us, so I gave my client advice about it.
When you sent the letter to Mr Burrell ‑ ‑ ‑ ?‑‑‑Yes.
‑ ‑ ‑ was your state of mind that you thought you’d done everything you needed to do to have been involved in the creation of a valid agreement?‑‑‑When I sent that letter to Mr Burrell, I felt that I had done all that I was required to do to fulfil my obligations to my client in respect of the agreement.
Thank you. And you had no issues or concerns, at that stage, as to whether any formal requirements of the Act had been complied with, did you?‑‑‑I felt that I had done what I was required to do, as far as my client was concerned, and I’d given her the advice that I felt was my duty to give her, and she signed the agreement with the advice that I’d given her.
Yes. Yes. Now, have you – I’m not saying you should have, but do you have any file notes with you at the moment regarding your meeting with your client on 12 November?‑‑‑I don’t have the file, but just before – while I was waiting outside, some documents were – copies of documents were brought out to me by the orderly, and there is a photocopy of a handwritten file note on 12 November ’04.
…
[Transcript of proceedings 16 September 2009 at pg 19 line 31]
Counsel referred Ms Cardone to her handwritten file note from the attendance with the wife on 12 November 2004 (Exhibit H1). The file note recorded as follows:
Attend [the wife]
12.11.04
9.50 – 10.00 10.20 – 10.45
Discussed the amendt [sic] to the Deed made by D Burrell.
She agreed to the amendt [sic] + initials same.
Discussed whether the H will get credit for any improvements to the [B] house.
We thought that there was a clause that specifically dealt c [sic] this.
On re- reading agreement – no specific reference to this-
However, as para 11 is worded she gets 30% of the value as at the date of sep [sic] (either agreed valued or as per valuation if value not agreed)
RC spent a lot of time emphasising the need to look fwd [sic] + improve her finance. pos [sic] as much as poss. [sic] rather than focus on – ve’s [sic]
Suggd [sic] she focus on working tog [sic] as a pnership [sic].
This can be compared with Ms Cardone’s file note dated 5 November 2004 (Exhibit W1), which was put to Ms Cardone in re-examination by counsel for the wife:
[MS PARKER] 5.11.04 3.40 TO 4.40 PM
WENT THRU [sic] THE DEED WITH HER AND THE SCHEDULES.
MADE 2 MINOR CORRECTIONS TO SAME.
SHE ADDED UP THE SCHEDULE FOR FURNITURE AND CHECKED THE FIGURES TWICE.
DISCUSSED THE IMLICATIONS [sic] OF THE AGREEMENT.WITH [sic] HER.
SHE WAS APPREHENSIVE ABOUT SIGNING THE AGREEMENT IN THE KNOWLEDGE THAT THE HU [sic] CD [sic] TERMINATE THE RELATIONSHIP WITH [sic] A FEW MONTHS IF HE WANTED TO.
NOTWITHSTANDING SHE SIGNED THE AGREEMENT.
RC RECOMMENDED THAT [THE WIFE] AND THE HU [sic] ALSO MAKE A COMMITMENT ABOUT THEIR RELATIONSHIP AND MOVING FORWARD NOW THAT THEY HAVE COME UP WITH THEIR AGREEMENT RE FINANCIAL MATTERS.
RC GAVE [THE WIFE] A COPY OF THE AGREEMENT TO TAKE WITH HER AND WILL SEND IT TO BURRELL ON MONDAY.
Ms Cardone’s evidence in cross examination continued, with reference to the file note of 12 November 2004:
So Ms Cardoni [sic], that note appears to record that your attendance on Ms [Parker] that day was interrupted in the sense that you saw her for about 10 minutes until about 10 am, and then there was a break and then you saw her again from about 10.20 to 10.45. Is that what the note records?‑‑‑Yes. Yes.
And then the next sentence of the note says:
Discussed the amendments to the deed made by D. Burrell.
Can I take it that means you discussed the handwritten amendments to clause 15 we were looking at a moment ago?‑‑‑Yes. Yes.
And would I be right in assuming the discussion about those amendments would have been more than one sentence; you spent some time discussing what they meant and what implications might arise from it, and the like?‑‑‑Yes. Yes. Yes.
…
MR HEINRICH: Now, Ms Cardoni [sic], is it the case that up to and including 12 November, you’d had several quite extensive discussions with Ms [Parker] about the financial agreement, the drafts and the implications and so on of it?‑‑‑Yes.
And would it be correct to say you’d had numerous conversations with her about it?‑‑‑I – my recollection is that there were several, and without referring to my notes, I can’t tell you how many.
…
MR HEINRICH: Can I just – I’ve shown you there a photocopy of a letter of yours dated 23 November 2004 to Ms [Parker]?‑‑‑Yes.
Just – could you just check that you’re happy that is a copy of a letter you sent to her?‑‑‑Yes.
And I direct your attention to the first sentence on the first page of the letter where the letter records – I’ll quote:
…numerous discussions we had about the various drafts of the agreement.
?‑‑‑Yes.
It’s correct to say there were numerous discussions?‑‑‑Yes. If I wrote that, that would be the case.
Could I ask you to look please at the financial agreement document, to page number 15?‑‑‑Yes.
You see, that document has got, completed in handwriting under your signature and the wife’s, the date, 5 November?‑‑‑Yes.
Did you think, on 12 November, to change those dates to read 12 November?‑‑‑I don’t have a recollection of that. I just don’t ‑ ‑ ‑
No. And I’m not saying you should?‑‑‑Yes. And if I – yes, I don’t have ‑ ‑ ‑
Sorry. No. So are you now able to recall whether, before you signed your letter to Mr Burrell that enclosed that, you considered whether you needed to make any other notes or amendments to dates or anything else on the document?‑‑‑I just don’t recall that.
Do you agree it would be correct, since you saw your client on 12 November, for you to have changed the dates on 15th to the 12th to accurately record what had really happened?‑‑‑Yes, I would – if the agreement was changed, yes, and I – it hasn’t been done.
[Transcript of proceedings, 16 September 2009, at pg 21, line 27, Emphasis added]
Mr Berman contended that the document that the wife’s solicitor provided advice with respect to on 5 November 2004 was a fundamentally different document to the final agreement. To repeat, it was submitted that the amendment inserting clause 15(b) into the agreement was significant and placed new obligations on both parties which required advice, or further confirmation, by Ms Cardone as to the effect of the amendment on the wife’s principal concern, which at the time was for her to be able to return to the matrimonial home. To also repeat, the new clause required the parties to each make a payment to reduce the balance of a specified account.
Mr Berman conceded that it could be concluded from the file note of 5 November 2004 that the requisite advice was given at the time the agreement was first signed by the wife due to the nature of what was recorded in the file note. He said though that this file note is to be contrasted with the file note dated 12 November 2004. Mr Berman submitted that the file note of 12 November 2004, and the evidence generally with respect to the attendance on this date, is lacking as to the level of formal advice which was given by the solicitor on that occasion. He submitted that it could be concluded from the file note dated 12 November 2004 that while general advice was provided as to the wife moving forward, advice was not given as to the effect on the wife’s rights, and the advantages and disadvantages of the agreement as was required. In summary, it was submitted that it was not open to find that the necessary advice had been given to the wife following the amendment by the husband’s solicitor after the wife had signed the agreement.
I accept that the amendment to clause 15 made by the husband’s solicitor placed a new obligation on the wife (and the husband) and as such this required the wife to be provided with further independent legal advice. Section 90G(1)(b) requires that for an agreement to be binding, inter alia, the parties must receive, before signing the agreement, legal advice regarding “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.” It was not enough for the wife to have been provided with advice of a general nature. The effect of the amendment on the wife’s rights needed to be addressed.
I am satisfied the wife was provided with the requisite advice as at the date of her initially signing the agreement on 5 November 2004, as evidenced by the lawyer’s certificate, the file note and the wife’s own evidence. I am not, however, satisfied that the effect or implications of the amendment made on 11 November 2004 were fully explained to the wife.
The wife says in her affidavit that the matters referred to in the original lawyer’s certificate at page 15 were not explained to her with respect to the amended agreement. The wife could not recall in cross examination what discussion took place with her then solicitor about the amendment but that she recalled “very little was discussed about” it. She could not remember in what detail the amendments were discussed. The wife said she felt she only had a short meeting with her solicitor on 12 November 2004 for the purpose of signing (initialling) the agreement with respect to the amendments.
Ms Cardone does not address in her affidavit the advice, if any, that she gave the wife regarding the effect of the amendment on 12 November 2004. In cross examination, Ms Cardone said that she felt that she had given the wife the advice she was required to and agreed that she spent time on 12 November discussing the amendments and their implication with the wife. Ms Cardone’s file note from the wife’s attendance on 12 November 2004 does not, however, provide any elucidation of the nature of what was discussed with the wife on that date, only that the amendments were discussed and the wife agreed to and initialled the amendment. This is to be contrasted to the file note dated 5 November when the wife initially signed the agreement, where it was recorded that she went through the deed with the wife and discussed the implications of the agreement with her.
There is also the issue that no further lawyer’s certificate was provided by Ms Cardone, nor was the date of the original certificate amended in any way on 12 November 2004. At the initial hearing of course Mr Heinrich contended that the failure to amend the date of the certificate at the time the wife and her solicitor initialled the amendments on 12 November 2004 was merely an “inadvertent omission” and submitted that the date of the lawyer’s certificate could be rectified. However, I do not accept that submission. As Mr Berman said, to rectify the date of the certificate would be meaningless given that it is not the date that was the issue but whether the requisite advice was given, and if it was not given as I have found here its absence is not something that can be rectified. Rectification is an equitable remedy which enables a court to rectify or “reform” a document or instrument so that it accords with the true agreement reached between the parties (R Meagher, D Heydon and M Leeming Meagher Gummow & Lehane’s Equity Doctrines & Remedies (4th ed, 2002), [26-005] and J W Carter and D J Harland Contract Law in Australia (4th ed, 2002), [1256]), but that is not what the issue is here when considering non-compliance with s 90G(1)(b).
In relation to s 90KA Mr Heinrich of course submitted that that section applied here to permit reference to equitable principles and he further submitted that this case could be distinguished from the decision of Murphy J in Fevia & Carmel-Fevia (supra). However, I do not accept these submissions. In my view Mr Berman put the position correctly in paragraph 63 above. Section 90KA has no application to the requirements of 90G in determining whether a financial agreement is binding.
Having regard then to the evidence of both the wife and her former solicitor with respect to the wife’s attendance upon the solicitor on 12 November 2004 and the discussions that took place with respect to the amendment to clause 15, and the absence of a certificate or statement as to the advice provided dated 12 November 2004 or later, I cannot be satisfied that the wife received the necessary advice with respect to the effect of the agreement on her rights and about the advantages and disadvantages of the wife entering the agreement.
I also cannot be satisfied that the husband received the necessary legal advice before he signed the agreement. As referred to above, neither the relevant terms of the agreement nor the solicitor’s certificate positively indicate this, and neither the husband nor his solicitor gave any evidence on this point.
There has therefore not been compliance with s 90G(1)(b) of the Act, and subject to a discussion regarding the application of s 90G(1A) (below) the financial agreement is therefore not binding on the parties.
As mentioned previously, subsections 90G(1)(c) and (ca) do not apply to this matter and these requirements do not therefore have to be satisfied for this financial agreement to be binding.
(2) In the event that paragraph (1)(b) is not satisfied, would it be unjust and inequitable if the agreement were not binding on the parties? Is the financial agreement binding on the parties pursuant to s 90G(1A)?
Subsection (1A) of s 90G provides that a financial agreement will be binding on the parties 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); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court. (Emphasis added)
Therefore, even if one of the requirements outlined in paragraphs 90G(1)(b), (c) or (ca) are not met, the Court may still find that the agreement is binding on the parties.
The Federal Justice System Amendment (Efficiency Measures) Bill (No 1) 2008 originally did not contain a provision in terms of s 90G(1A). Amendments (which included s 90G(1A)) were later made to the bill following an inquiry by the Senate Standing Committee on Legal and Constitutional Affairs.
The Supplementary Explanatory Memorandum, which accompanied the amendments made to the bill, explains that s 90G(1A) was introduced to enable a court to declare, in enforcement proceedings, that a financial agreement (or termination agreement) is binding “in spite of a failure to meet some of the technical requirements if the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties.” The emphasis is therefore on ensuring agreements are not found to not be binding merely due to a “technical” failure. No further explanation as to what is a “technical” requirement is provided.
Item 8(6) of Schedule 5, Part 1 of the amending Act provides that for a financial agreement made before the commencement date on 4 January 2010, as this agreement was, s 90G(1A)(b) does not apply and instead the following is inserted:
(b)paragraph (1)(b) is not satisfied in relation to the agreement; and
The Supplementary Explanatory Memorandum explains with respect to this item:
21. Subitems 8(6), 8(7), 8(8) and 8(9) will provide for the circumstances in which a financial agreement or a termination agreement made before the commencement of item 8 will bind the parties to the agreement. Such an agreement will bind the parties to it if:
§each party has signed the agreement, and
§each spouse party, before signing the agreement, obtained independent legal advice from a legal practitioner about the effect of the agreement on their rights, and the advantages and disadvantages, at the time the advice was provided, of making the agreement.
A court will be able to declare, in enforcement proceedings, that the agreement is binding on the parties where each spouse party did not obtain that prior independent legal advice if it is satisfied it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstance from the time the agreement was made).
In Kostres & Kostres (2009) FLC 93-420, the Full Court (Bryant CJ, Boland and Jordan JJ), said of the amendments to s 90G (at [165]):
One of effects of the amending Act is to provide additional protection for parties who enter into financial and termination agreements by enabling a court to declare, in enforcement proceedings, that an agreement is binding despite a failure to meet the procedural requirements relating to the making of the agreement if the court is satisfied that it would be unjust and inequitable if the agreement did not bind the spouse parties (disregarding any change in circumstances from the time the agreement was made). This makes it even more essential that the substantive clauses of such agreements are drafted with precision to ensure effectiveness, especially as they may be dealing with future acquired property or other interests in property.
To repeat, Mr Berman for the wife submitted that s 90G(1A)(c) requires the Court to consider the efficacy of the settlement and the entitlements that the parties are to receive pursuant to the agreement.
To also repeat, Mr Jordan for the husband contended that the “unjust and inequitable” requirement of s 90G(1A)(c) invites the Court to refer back to the nature of the complaint, not the efficacy of the agreement. Mr Jordan contended that the provision requires the Court to look at the justice and equity of the circumstances surrounding the lack of compliance with the requirements of s 90G and that if Mr Berman’s submission was accepted regarding the need for the Court to be satisfied that the agreement was just and equitable, it would return the Court to a situation akin to the approval of old s 87 agreements, which is was submitted was not the intent of the legislature.
No guidance is provided either in the amending Act or the accompanying Explanatory Memorandum as to what is being referred to. On the one hand the reference to “disregarding any changes in circumstances from the time the agreement was made” could indicate that the efficacy of the agreement itself is to be considered in light of the circumstances applying at the time. On the other hand, if it was intended that consideration was to be given to whether an agreement was just and equitable when determining whether the agreement should bind the parties, s 90G(1A)(c) would have been worded differently. For example it may have read “a court is satisfied that the agreement / terms of the agreement are just and equitable.” Such wording would then obviously mirror the requirement in s 79(2) of the Act that the Court must not make an order under s 79 unless it is satisfied the order is “just and equitable”. However, the legislature has expressly chosen to use the words “unjust and inequitable”.
Significantly s 90G(1A)(c) does not refer to whether the terms of the agreement are unjust and inequitable, but whether “it would be unjust and inequitable if the agreement was not binding”. Nothing in the wording or explanation of the provision in any of the materials accompanying the introduction of the Federal Justice System Amendment (Efficiency Measures) Act (No 1)2009 suggests that the Court is required, in considering s 90G(1A) and whether it would be unjust and inequitable if an agreement was not binding, to undertake any enquiry into the nature of the agreement itself or to make any finding as to whether the terms of the agreement at the time it was made were just and equitable between the parties.
In my view, s 90G(1A)(c) therefore contemplates the court looking at the nature of the non-compliance with s 90G(1), and determining whether, in the circumstances, it would be unjust and inequitable if the agreement was not binding on the parties due to the failure to comply with a “technical” requirement.
Given this finding I am required to determine whether, given the circumstances surrounding the making of the financial agreement in this case, it would be unjust and inequitable for the agreement not to be binding on the parties.
I have found that the non-compliance with the provisions of s 90G is that the wife did not receive independent legal advice about the effect of the agreement on her rights and about the advantages and disadvantages at that time following the amendments made by the husband’s solicitor.
Mr Jordan of course submitted that the wife should not be able to avoid the terms of the financial agreement being binding due to a “technicality” and should not be able to rely on an omission of her own solicitor.
As mentioned above, the intention of the amendments is to avoid financial agreements being found not to bind the parties due to technical difficulties. Although s 90G(1A)(b) includes subsection (1)(b) in the list of relevant subsections, it could be argued that the provision of legal advice is not a “technical” issue but a substantive matter going to the heart of the agreement. The Supplementary Explanatory Memorandum explains that the new s 90G(1)(b) is intended to ensure that parties receive independent legal advice before signing the agreement so that they are able to make an “informed decision”.
In these circumstances, I am not satisfied that it would be unjust and inequitable if the financial agreement was not binding. If the only issue of non-compliance with s 90G was that, for example, one of the parties had not been provided with a copy of the relevant statement from their solicitor or a copy of the statement from the other party’s solicitor, the court may indeed be satisfied that it would be unjust and inequitable in such circumstances for the parties to not be bound by the agreement due to a so-called “technical” omission.
However, the receipt of independent legal advice by all parties to a financial agreement is an essential requirement. Indeed, it could well be unjust and inequitable to the wife if she was bound by the financial agreement in circumstances where I have found she was not fully advised of the implications of the amendment to clause 15.
In Ruane & Bachmann-Ruane and Anor [2009] FamCA 1101, Cronin J, in the context of the provisions of s 90G prior to the recent amendments, discussed the need to obtain legal advice with respect to entering into a financial agreement. His Honour said at [76]:
76. In addition, the plain reading of s 90G is for parties to obtain legal advice. It does not follow that the advice has to be accepted or followed nor for that matter, for the advice to be correct. The purpose of the provision is to ensure the party understands not only the rearrangement of property and financial resources but also that rights are being affected. Those rights include exclusion of access to the courts subject to certain exceptions.
I am thus not satisfied that the financial agreement is binding on the parties pursuant to s 90G(1A).
I observe that that would still be the result in this case even if I am wrong about the meaning of “unjust and inequitable” and it does require consideration of the efficacy of the agreement itself. That is because, as Mr Berman correctly pointed out, there is no evidence before the Court on this topic despite the husband having ample opportunity to present such evidence, and he having the onus to do so given that he is the party seeking the protection of the financial agreement.
Conclusion
Although the wife seeks an order that the financial agreement be set aside, that is not an order that is open to me. What is open to me though is to declare that the financial agreement between the parties is not binding within the meaning of the Act, and that is a declaration that I propose to make. The effect of that will be that neither party, but particularly the wife, is precluded from pursuing an application for orders pursuant to s 79 of the Act, and in that context, as in the wife’s Amended Application filed on 3 March 2009, an application for an order pursuant to s 106B of the Act.
I will hear counsel as to the future progress of this case given the declaration that I propose to make.
I certify that the preceding 120 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 3 August 2010.
Associate
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