Piper and Mueller
[2014] FCCA 2659
•3 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PIPER & MUELLER | [2014] FCCA 2659 |
| Catchwords: FAMILY LAW – Whether financial agreement binding – de facto parties – whether strict compliance with s.90UJ – nature of legal advice; s.90UJ(1A) whether unjust and inequitable for agreement not to be binding on the spouse parties; applicant alleges he was subjected to illegitimate pressure to enter into agreement and that the respondent engaged in unconscionable conduct and agreement void and agreement should be set aside under s.90UM. |
| Legislation: Family Law Act 1975, Part VIIIAB, ss.90B, 90C, 90D, 90G, 90UJ, 90UM, 90VM, 90SM, 90RD, 90SA, 90UK, 90UC, 90UD |
| Cases cited: Johnson v Buttress (1936) 56 CLR 113, 134 |
| Applicant: | MR PIPER |
| Respondent: | MS MUELLER |
| File Number: | BRC 3829 of 2012 |
| Judgment of: | Judge Willis |
| Hearing dates: | 18 & 19 November 2013, 6 February 2014 |
| Date of Last Submission: | 6 February 2014 |
| Delivered at: | Cairns |
| Delivered on: | 3 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Black |
| Solicitors for the Applicant: | PM Lee & Co |
| Solicitors for the Respondent: | Porter Davies Lawyers |
ORDERS
It is declared that the agreement signed by the Applicant on 7 August 2009 and signed by the Respondent on 21 August 2009 (“the agreement”) is a “Part VIIIAB financial agreement” within the meaning of that term in the Family Law Act 1975.
It is declared that the agreement is a binding financial agreement under s.90UJ of the Family Law Act 1975.
The application to set aside the binding financial agreement pursuant to s.90UM (1) (e) and s.90UM (1) (h) is dismissed.
In the event that there is to be any application for costs, the Applicant is to file and serve written submissions within 28 days of the date of this Order and the Respondent is to file and serve written submissions within 28 days of being served. A date will then be allocated for the oral hearing of the costs application, unless the parties agree that it should proceed on the papers, at the discretion of the Court.
Within 28 days of the date of this Order, the parties are to indicate to the Court via a written submission their views about the proposal to now dismiss the Application filed on 2 May 2012, and/or the accompanying Response filed 16 July 2012.
IT IS NOTED that publication of this judgment under the pseudonym Piper & Mueller is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 3829 of 2012
| MR PIPER |
Applicant
And
| MS MUELLER |
Respondent
REASONS FOR JUDGMENT
The applicant in this matter, Mr Piper (“the applicant”) seeks to set aside a financial agreement (“the financial agreement”) entered into with Ms Mueller (“the respondent”).
The respondent opposes the orders sought by the applicant and seeks to uphold the financial agreement which she submits is a binding financial agreement.
Through the process of this litigation, Judge Spelleken made procedural orders on 21 June 2013 setting the matter down for the hearing of three preliminary questions.
Those questions are:
a)Whether the purported agreement is a “Part V111AB financial agreement” within the meaning of that term in the Act;
b)Whether the purported agreement is binding on the parties under s.90UJ of the Act; and
c)Whether the purported agreement should be set aside under s.90UM(1)(e) or s.90UM(1)(h) of the Act.
This trial proceeded over two days in Brisbane in November 2013. By the end of the second day, whilst the evidence had finished, the submissions still needed to be made. A third day was allocated in February 2014 and submissions were made via video link from Brisbane to Cairns.
During the intervening period, however, a significant decision was handed down in December 2013 relating to relevant provisions touching on the issues and interpretation of sections relevant to this matter namely, Wallace & Stelzer & Anor [2013] FamCAFC 199 (“Wallace & Stelzer”), a Full Court decision of Justices Finn, Strickland and Ryan. The Full Court decision involves discussion of the effect of the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 (Cth) (“2009 amendments”) and whether those amendments operate retrospectively and discussion about certain provisions in Schedule 5 of the 2009 amendments (items 8 and 8A).
Counsel for the applicant Mr Black and solicitor advocate
Mr Rounsefell for the respondent referred to this decision in their oral and written submissions.
Since the closing of submissions, I became aware that an application for special leave to appeal to the High Court from the Full Court decision in Wallace & Stelzer[1] had been lodged.
[1] Wallace & Stelzer & Attorney-General of the Commonwealth [2014] HCA Trans 135.
The High Court leave to appeal application was heard on 20 June 2014. The matter was considered and on the same day, Justice Keifel stated during exchanges in submissions, in relation to the 2009 amendments, “Jurisdiction has not been ousted, it has simply been given, if anything, a broader discretion to determine whether or not the requirements as they are now set, have been met.”
Special leave to appeal was refused with costs with Hayne J stating, “In our opinion there is no reason to doubt the correctness of the conclusions reached by the Full Court of the Family Court of Australia.”
I wish to thank both Mr Black of Counsel and Mr Rounsefell solicitor advocate for their submissions and assistance throughout this matter.
The material of the applicant and respondent has been read into the record at the commencement of the trial.
In determining the three questions, I have had regard to the affidavits, exhibits and oral evidence, various cases as set out in the parties written submissions, case outlines and arguments, the relevant legislation, explanatory memorandum, and the most recent case law and the authorities referred to by each party.
In these reasons, a statement represents a finding of fact unless otherwise indicated.
Orders sought
By the commencement of this trial, the Court had already determined the three questions that are to be decided in this hearing.
In his Initiating Application, the applicant sought;
a)a declaration that pursuant to s.90RD of the Family Law Act (“the Act”) that a de facto relationship between the applicant and the respondent commenced on 19 May 2004 at Brisbane and broke down on or about 12 July 2011.
b)A declaration that the agreement between the applicant and respondent dated 21 August 2009 (“the agreement”) is not binding on the parties as it is not a financial agreement made pursuant to part VIII AB of the Act;
c)Alternatively the applicant seeks an order that the Binding Financial Agreement be set aside pursuant to s.90UM(1)(a), (e) and (h) of the Act. (reliance on section (a) was abandoned at a directions hearing before Judge Spelleken)
The applicant also seeks orders that the respondent pay the applicant’s costs of and incidental to these proceedings and any other orders that this honourable Court deems fit.
The respondent sets out the orders sought relatively:
a)A declaration that a de facto relationship between the applicant and the respondent commenced on 19 May 2004 and broke down on 19 August 2007, was resumed and broke down again on 18 September 2009, and was again resumed and broke down irretrievably in April 2010.
b)A declaration that the financial agreement between the applicant and the respondent dated 21 August 2009 is binding on the parties as it is a financial agreement made pursuant to part with VII AB [sic] of the Act.
c)A declaration that the financial agreement between the applicant and the respondent dated 21 August 2009 is binding on the parties as:
i)It was not obtained by any fraud, including any non-disclosure of a material matter on the part of the respondent;
ii)it is not void, voidable or unenforceable; and
iii)in respect of the making of a part VIIAB [sic] financial agreement, the respondent did not engage in conduct that was, in all the circumstances, unconscionable.
d)A declaration that pursuant to the terms of the financial agreement between the applicant and the respondent, dated 21 August 2009, the applicant has no entitlement to any of the respondent’s property listed in the first schedule as assets and financial resources of Ms Mueller and no liability for any of the respondents debts;
e)A declaration that the bank accounts, all investments and the balance of the property of the applicant and the respondent be restrained by each of the parties to the exclusion of the other party;
f)The applicant pay the respondents costs.
Background
The parties met each other in May 2003 and dated up until they commenced “a relationship” in May 2004.
In May 2005 the parties became engaged. The applicant says that they stayed engaged until 19 August 2009 when the respondent called the engagement off. He says that they separated in July 2010.[2] In contradiction, the respondent says that their engagement was called off in August 2007, that the parties had relationship counselling around that time, and that in mid 2008 they became engaged for a second time, with the applicant giving the respondent the original ring that had been returned to him. She says that their second period of being engaged ended in September 2009.
[2] Paragraph 8, Applicant’s affidavit filed 2 May 2012.
These parties commenced living together only after a property, a unit at Property H, [H], was acquired (“the [H] property”) in May 2005. The circumstances surrounding the purchase of the [H] property at auction, was to be a source of discontent between the parties and is referred to elsewhere in this judgment in more detail. There are no children of this relationship.
The parties entered into a financial agreement in August 2009 (“the agreement”). The applicant was born on [omitted] 1950 so he was aged 59 when he entered into the agreement and the respondent was born on [omitted] 1962 and she was then aged 47.
Each had been in relationships before and been through the difficulties of property division and Family Law proceedings at the end of a relationship. As will be seen elsewhere in this judgment, these parties entered into various agreements that they either drew up themselves or had assistance from their solicitors in drawing up.
The respondent says their de facto relationship ended in April 2010. The Applicant says their relationship ended July 2010
I am satisfied that the parties were in a de facto relationship which commenced around May 2004. I am satisfied that this de facto relationship ended in April 2010 as deposed to by the respondent.
I am satisfied that the agreement is in writing and that each of the parties has had legal advice prior to signing the document.
The applicant is seeking to have the agreement declared not binding and or that the agreement be set aside. He also seeks a declaration that the respondent holds the [H] property in trust for herself and the applicant in equal shares, contrary to the terms of the agreement he entered into in August 2009. Essentially the applicant seeks to have the agreement set aside to enable him to proceed with a property claim under the Family Law Act.
In his affidavit material, the husband asserts he was asked on many occasions to sign a financial agreement long before the financial agreement finally signed on 7 August 2009, and that he signed the agreement presented to him by the respondent, under pressure of thinking that if he did not sign, the marriage would not go ahead (and purportedly whilst coping with a back injury and depression) and that he needed to sign it to keep his relationship intact and if he did not sign it he would “ lose her,” referring to the respondent .
The applicant asserts that the agreement is not a binding financial agreement due to various technical difficulties and further, that it would not be unjust and inequitable if the agreement was not to be binding.
The applicant submits that if the Court finds that the agreement is binding, that it ought to be set aside as it is either void or voidable, and or the respondent’s conduct was unconscionable towards the applicant, who maintains that he was under a special disadvantage and that the respondent applied illegitimate pressure upon him to enter into the terms of the agreement.
The respondent is opposed to the application and seeks to have the agreement upheld. The respondent denies that any of the issues raised by the applicant should result in the agreement not being a binding financial agreement. She asserts it would be unjust and inequitable if the Court found that the agreement was not binding on the parties. The respondent denies she has acted unconscionably or exerted any illegitimate pressure on the applicant.
The Witnesses
The Applicant
I had the impression that the applicant, who, during his evidence, constantly spoke quietly, was determined to say as little as possible and that he played his cards very close to his chest. I consider that the applicant is not an accurate historian. Added to this, he has, or says he has, a woeful memory and his statements could not therefore be relied upon as being accurate. He showed little ability to recall almost anything with precision.
He frequently stated in response to questions that he could not remember or could not recall. I was left with a strong impression that this was his strategy if he considered that to answer otherwise would not have assisted his case. Even when showed photos of himself at a function, the applicant claimed to be unable the occasion.
I found his evidence at times to be quite deliberately vague. On other occasions, under cross examination, it was only when he was reminded about his own previous evidence, would he then actually make an otherwise obvious admission. For example, at one stage during the trial the applicant said he simply could not remember when the parties went to Bali and he thought it was in 2011. He was reminded that he had just given evidence under cross examination that he had gone and worked in New Guinea in 2011 and 2012. Only then did the applicant concede that the parties were in Bali in 2009.
Having demonstrated such a poor recall for facts and dates and many issues, the applicant claimed to have a clear recollection that the respondent called off their engagement on 19 August 2009. There is no explanation in his affidavit material as to why he would have any particular recall of this precise date, just that “On 19 August 2009 the respondent ended our engagement.”[3]
[3] Affidavit filed 2 May 2012, paragraph 48.
When the applicant was sworn in to give evidence at the trial, his own Counsel sought to update his evidence in relation to current employment, and also sought the applicant’s comments in relation to various documents in the wife’s material, and also then proceeded to ask the applicant how he could recall this precise date.
The applicant said, “from my point of view at all times – I loved Ms Mueller greatly and to me we were trying to stay as a couple. I was under what I call extreme pressure to sign various FB’s, financial documents and agreements. I resisted those to great length. However, I realised at the particular time, circa the seventh (the date the applicant signed the agreement) that Ms Mueller really needed to have something signed or else our relationship was going to end. It was put in those sorts of words. I looked at it as blackmail. I didn’t want our relationship to end at all and I signed that document. The reason I remember the 19th is that I thought - and if you read the correspondence that we’ve included in the affidavit- that she loved me and if I signed this then slowly but surely our relationship would get on a smoother keel and – it would continue in good grace. However, within 12 days of signing that – therefore I’m thinking that everything is going to be slowly better – I’m now confronted with the end of the relationship totally, which quite honestly blew me away at the time. So that’s how I remember that particular date.”
He was asked various questions and was given various opportunities to explain to the Court how it was that he could remember that specific date with the breakup. He was not able to link the date to any other incident or happening which was fixed in his mind. His case was simply that he “remembered the date.” This amounts to nothing more than the applicant’s own recall which I am satisfied cannot be relied upon.
As explained elsewhere in these reasons, this explanation is also entirely at odds with a document signed by both parties, drawn up in September 2009 which confirms that the engagement was off as of 14 September 2009[4]. I do not accept that the applicant would sign off on that document if it was wrong and he had, as he says now, a very strong memory that the date was 19 August 2009. Added to this, I also accept the evidence of the respondent that she was not even in Brisbane on this day. I do not accept the applicant’s assertion that the engagement was called off on 19 August 2009 and I prefer the respondent’s evidence on this issue.
[4] Respondent’s affidavit filed 24/10/13, annexure 9.
The applicant is prepared, if it suits his case, to be loose with the truth. The applicant’s evidence about the purchase of the [H] property, as will be seen elsewhere in this judgment, reveal he was untruthful to the Court about the cash he had in the bank at the time he purchased the unit.
I do not consider that he was truthful when he was asked about some of the terms of the Agreement that in face he had drawn up. He was evasive or deliberately vague when certain aspects of the agreement were pointed out to him such as the likely advantage to him[5] and which clearly the respondent would not have requested be put in the agreement. The applicant appeared to want to distance himself from being the likely beneficiary of the clause and blamed his former solicitor saying it must have been his idea to include that clause and suggesting initially that he could not really say who gave instructions to his own solicitor to draw up the agreement.
[5] Annexure A, clause 16.
Annexure 8, Clause 16 reads:
“All property which is in excess of [Ms Mueller]’s share and [Mr Piper]’s share and inheritances and gifts and the chattels listed in annexures A to the first and second schedules (“the surplus”) shall be dealt with as follows; (a) [Mr Piper] shall receive the net assets to the value of the sum which, when added to [Mr Piper]’s share, shall equate [Ms Mueller]’s share; (b) if the surplus shall not achieve the equalisation contemplated by paragraph 15(A) hereof, then [Mr Piper] shall receive the whole of the surplus; (c) the balance of the surplus shall be divided as the parties shall agree or otherwise in accordance with paragraph 21 hereof.”
He was asked how Clause 16 got in there and he said, “probably my instructions, I don’t recall”[6] and made some references to it being the solicitor’s idea. The applicant said; “the solicitor must have come up with that. It’s how lawyers write letters.”
[6] Transcript, page 32, lines 0-5.
In response to the suggestion that it was written on his instructions the applicant said, “I don’t recall giving instructions for that sort of wording. I can only assume someone is trying to protect or trying to increase my assets.”
When it was suggested that he knew the clause was drafted on his instructions, the applicant replied, “I don’t know but I’m assuming.” When it was suggested to the applicant that the document had his imprint all over it he replied “it has my signature on it.”[7]
[7] Transcript, page 32, line 15.
Overall unfortunately the applicant is a very unimpressive witness whose testimony could not be relied upon. I consider the applicant was tailoring his evidence to suit his own case, using lack of memory, obfuscation and giving inconsistent evidence. When issues arose that were contrary to the applicant’s case, his response is to try and distance himself from the action or conduct, or blame somebody else.
I considered the applicant to be a rather shrewd individual who having been through multiple relationships “with 5 lovely ladies” as he explained to his psychiatrist, had decided in giving his testimony that the less said the better and when in doubt as to whether an answer might not assist his case, he said “I can’t recall.”
Significantly the cornerstone of his case, namely that he signed the agreement under pressure and threat that their relationship was off unless he signed the agreement, crumbled somewhat when it was unearthed during the respondent’s evidence that she did not have the agreement drawn up by her solicitors and did not present it to the applicant, as alleged in the applicant’s affidavit. Rather, the applicant had the Agreement drawn up by his own solicitors on his own instruction. He had legal advice, signed the agreement first and sent it to the respondent. Only when faced with this evidence (after the parties found a copy of the agreement with the applicant’s solicitors name shown as having drawn the document up) did he concede this was so. This needs to be borne in mind when reading the affidavit material of the applicant made prior to this concession. This incident amply illustrates the fallibility of the applicant’s memory.
The back injury sustained when he lent down in his chair at work one day, resulted in the applicant receiving a personal injuries payout of around $160,000.00 after separation. During this hearing I saw photographs of the applicant and respondent in Bali, white-water rafting in September 2009, (after the applicant’s alleged back injury) in which the applicant is seen sitting excitedly in a raft with a helmet on, along with the respondent, and safety jackets, about to go down what is described as a 20 foot drop. Under cross examination, the applicant tried to minimise his decision to engage in this risky behaviour at a time when he had allegedly suffered a significant back injury. The applicant’s explanations in this regard were unconvincing.
Overall, the applicant is a poor historian whose testimony could only be accepted with significant caution. Where ever the testimony of the applicant conflicts with that of the respondent, in the absence of any independent evidence, I prefer the evidence of the respondent.
The Respondent
In terms of her testimony, the respondent was a much more reliable historian. She had a much clearer memory of the events that unfolded and the timing of events. I did, from time to time, have the impression that she was at pains to put across her narrative and that she did that at times, regardless of what question was being asked of her. I nonetheless considered she was an honest witness.
In relation to their de facto relationship I had a very strong impression that, from the applicant’s perspective, their relationship was more about business and how the respondent could assist him in his business pursuits, which was secondary to their personal relationship. The strong impression given by the respondent was that she placed high priority on their personal relationship and acted to her detriment in business and financial decisions with the applicant accordingly. Overall, at times she seemed somewhat naïve in business matters, and it was clear that she trusted the applicant and relied on him to do the right thing by her given their personal relationship.
I found the respondent to be open and honest. Although she seems to be quite confident in many respects, she has been susceptible to the deceptive behaviour of the applicant in the manner in which he acquired the [H] property, as will be seen elsewhere in this judgment. Her evidence was given with particularity and was inherently plausible unlike the applicant’s. She was prepared to make concessions when they were appropriate and to make admissions against her own interest.
I accept the respondent’s evidence that she was spending time from 13 August 2009 to 20 August 2009 [omitted] on the Sunshine Coast, and that led to her signing the Agreement after the applicant. I also accept she was not even in Brisbane on the date the applicant alleges she threw the engagement ring back at him on 20 August 2009.
After the agreement was signed off in August 2009, the parties headed off to Bali on 15 September 2009. I do not accept the applicant’s feigned memory loss that he didn’t know when he went to Bali. I do not accept either that he couldn’t remember the 80th birthday celebration of the respondent’s mother, even when looking at a photograph of it, which included himself at the celebration[8].
[8] Transcript, 19 November 2013, page 69, lines 25-45.
The respondent says that after they returned from Bali:
“The applicant’s back injury did not restrict him from that time from participating fully in all of the group activities on a trip to Bali, including the vigorous physical activity involved in white-water rafting with our friends, without restraint or complaint of any kind.”
The respondent had high expectations of what a week in Bali was going to do:
“Despite our expectation that this would be a fulfilling experience in a relaxed environment and that our relationship would be reinvigorated and our commitment reinforced, the relationship was becoming unstable.”[9]
[9] Respondent’s Affidavit filed 24 October 2013, Paragraph 59.
When they returned to Brisbane, she says, and I accept that: “we jointly decided that the relationship was so severely strained that it had broken down.”
I accept that when the respondent signed the agreement on 21 August after the applicant had signed first on 7 August 2009, the parties had not called off the engagement prior to signing the agreement. I accept the respondent’s evidence regarding the date the engagement was called off and the separation date.
Overall, the respondent impressed me as a witness of truth. Generally, wherever the applicant’s evidence is contradicted by the respondent, in the absence of independent evidence I prefer the respondent’s evidence.
Evidence generally:
Acquisition of the [H] property
The issue of the respondent not having an interest in the property was in dispute between the parties after the purchase and remains an issue in dispute at the time of trial.
The applicant’s evidence is that having spotted the auction whilst driving together on a Saturday morning, they pulled over and went in and looked around the property for 20 minutes or so prior to the commencement of the auction.
The applicant agreed it was to be their joint home and says that they were looking for a townhouse to live in[10]. He has no recollection that there was any earlier agreement that they were going to share the costs and says they had not had not spoken about anything to do with buying it, but that he just felt confident that “we would be able to get it for what I could afford.”[11] He has no recollection of any specific discussions about whose name it was to be acquired in.
[10] Transcript 19 November 2013, page 27, line 36.
[11] Transcript 19 November 2013.
The applicant said though that they had agreed weeks before buying the property that they were going to buy a property together, and that whilst not recalling much about those discussions the applicant said that those discussions “involve talking as any man or wife would, or couple would, in regards to the property that they might be looking for. We visited a number of different properties. We hadn’t seen anything we liked and admittedly we walked into this one at [H]. We both fell in love with that at the time and pursued it with zest at the time.”[12]
[12] Transcript 19 November 2013, page 28, lines 0 to 10.
The applicant says that “we had looked at previous properties and hadn’t found anything large enough to suit our requirements and we were looking at properties to move in together to be a couple.” [13]
[13] Transcript 19 November 2013, page 26, line 45 and page 27, lines 0-5.
Having looked at the property for 20 minutes, the parties agreed that they loved the property. When the bidding started shortly after at the on-site auction, the applicant commenced bidding. He gave evidence that the bidding got to a point that he says exceeded his financial capacity. The applicant said that the bidding got to around $850,000.00 “where I couldn’t go any further without support.”[14] When questioned under cross examination as to his source of funds, the applicant agreed that he had all the money ready “sitting in a bank” and that “the money was there from business interests.” He then said “I’ve had to get a – a mortgage on it as well, but I was capable of going up to that level” without consultation with his bank. The applicant then said he had “between $250,000 and $300,000” sitting ready.[15] [This evidence is contradicted by later evidence that all of the funds were borrowed, except the funds put in by the applicant, however, that evidence is inconsistent with the applicant’s later position in April 2006 that $50,000.00 of the $150,000 advanced by the respondent was a loan to his company [M] Pty Ltd, and that evidence is inconsistent with the applicant’s evidence that the $150,000 was advanced by the applicant as a loan to his trust, [O] Trust].
[14] Transcript 19 November 2013, page 28, line 40.
[15] Transcript 19 November 2013, page 29, lines 9 to 25.
The applicant said that the bids got “up around 8 to 850. I realised that we weren’t going to buy it. My recollection is I turned to - to Ms Mueller and we had a quick few words to each other.” The applicant said he remembers saying “do you really want this property?” He said that “obviously I liked it or else I wouldn’t have said that. And to which I got a reply, yes, I can – I can top it up. Let’s keep going” and as – and that’s what we did.”[16]
[16] Transcript 19 November 2013, page 29, lines 5-45.
The applicant said that he believes his final bid was $957,000.00. His bidding successfully achieved the acquisition of the [H] property. The applicant says that the other bidders clapped at the time that their successful bid sealed the deal. They hugged each other and were very excited. “My recollection, both very happy and I think we joined the auctioneer and opened a bottle of bubbly and enjoyed the moment.”
The respondent when asked about this issue repeated on various occasions that there had been an agreement that they would buy the property as tenants in common. She said “we agreed to be tenants in common previously if need be.”[17] The respondent agreed that after the applicant indicated to her that the price was over his limit she was still of the view that she wanted to buy the property saying “yes we both did.”[18] The respondent agreed that she indicated that she would put money towards the purchase and added “as tenants in common yes.” The respondent agreed during cross-examination that she did not actually say anything about being tenants in common at the auction[19] but it is her position that they had previous discussions about buying property together. This is confirmed by the applicant’s evidence. She said there was no discussion about what specific percentages any property would be held in. The respondent said it was discussed that if “we buy a property together it would be as tenants in common based on percentages, not on 50% or any specific how much [Mr Piper] would put in, or what I would put in on what was contributed, that we would be tenants in common because that’s how it is when you buy property together.”[20] This accorded with the applicant’s evidence that they were looking for a property together.
[17] Transcript 19 November 2013, page 90, line 34.
[18] Transcript 19 November 2013, page 90, line 38.
[19] Transcript 19 November 2014, page 91 line 15 – 45.
[20] Transcript 19 November 2013, page 93, lines 40-45.
Under cross-examination, the respondent was queried as to why it is that she paid the sum of $150,000 after the auction yet at that stage she had still not signed any contract. Her response was that, “[Mr Piper] told me the contract was being drawn up.”[21]It was suggested to the respondent that she could not have thought that she was going to pay an amount towards the property and then sign a contract down the track. She replied that she expected a day or two days after the auction to sign a contract. She said, “I asked the applicant when I would be signing, and he said he would put it in the name of the [O] trust and I was in shock. I was in disgust, actually. And it almost tore us apart.”[22]
[21] Transcript 19 November 2013, page 94, line 5.
[22] Transcript 19 November 2013, page 92, line 10.
The respondent agreed that she hadn’t made any specific arrangements for finance before the auction but said that she knew her capability and that she could draw down more than $150,000.00.
I am satisfied that the [H] property was only able to be purchased through the agreement and willingness of the respondent to put her own funds towards the purchase price.
Having heard the evidence of the applicant and the respondent I am satisfied that the respondent rightly expected the contract to reflect her injection of funds into the joint purchase of what was to be their joint home.
Her agreement, in answer to the question from the applicant “Do you really want this property?” was “yes.. I can top it up, let’s keep going.” The question asked was not, “do you really want to lend my family trust money to buy this property?” and nor was it “do you really want to invest in one of my companies by becoming an unsecured creditor?”
I consider that the applicant’s decision and explanation to the respondent that the money she put in was to be later classified as a loan to a family trust (and later a loan to a company) was disingenuous and contrary to anything that was ever suggested to her at the time of the auction. It demonstrates to me, how shrewd the applicant is about financial matters and securing his own business interests first and foremost with no regard for the respondent’s financial security. It also illustrates her financial naivety and the trust she placed in the applicant based on her intimate relationship with him.
This is how the applicant did business with the person that he says later in his evidence is “the woman I love”. His conduct is entirely inconsistent with his assertion that he was later pressured to sign the agreement and that he is the weaker party. It also illustrates the strength and ability of the applicant to exert his will over the respondent. In fact, the evidence demonstrates that the respondent is the weaker person in the relationship and that the applicant took advantage of her.
I also accept that the respondent was shocked to find, as she ultimately did, that she was not included on the contract as a purchaser. I accept that there had been discussions with the applicant prior to the auction about purchasing as tenants in common if the respondent put in funds.
The respondent says, and I accept, that she was left in a very vulnerable position at this time and that she could either call off the relationship or she had to trust the applicant.
Other documents/written agreements
It is clear from the evidence that each of these parties has signed a series of documents during their relationship relating to their intentions in regard to the division of property, or marking an event, such as the calling off of their engagement.
This flies in the face of the applicant’s assertion contained in his affidavit at paragraph 5, that he could not see the benefit or reason for wanting to enter into a financial agreement as he felt they had a committed and loving relationship.
The applicant also asserts in his oral evidence that he was always under pressure to sign documents by the respondent. I do not accept this assertion. The applicant has engaged his own lawyers at an earlier stage as seen in annexure 6 of the respondent’s affidavit. This document confirms that he has had legal advice and that he relinquished all de facto and marital claims to the [H] property.
The applicant attended upon a different lawyer to have the agreement drawn up and has then seen another lawyer as soon as the engagement was called off. He is now represented by a third lawyer. I am satisfied that the applicant is well familiar with how to protect his own position and assets.
Written Agreement – 25 July 2004
The first of their other written agreements was drawn up and signed off on 25 July 2004.[23] This agreement is drawn up two months after the auction for the [H] property and after the respondent has advanced her own $150,000.00 and after being informed by the applicant, that in fact she is not to be included on the contract and that the money she advanced for the purchase was to be characterised as a loan to a trustee company or his family trust.
[23] Annexure 1, Respondent’s Affidavit filed 24 October 2013.
Once the respondent transferred the $150,000.00 to the applicant, it seems that the applicant had control of those funds and the respondent received nothing in return. It is in this context that their written agreement should be read.
The agreement is titled: Agreement between Mr Piper as trustee for the [O] Trust and Ms Mueller. The first clause states This is a legally binding document. Clause 2 says: Ms Mueller will make a $150,000 loan to [O] Trust towards the purchase of a property known as Property H, [H], Brisbane, Queensland, Australia.
Clause 3 reads:
This loan is provided by Ms Mueller and accepted by Mr Piper solely as an avenue for both parties to live in harmony on the said property thus providing a feel of ownership and commitment for a happy personal relationship and thus both parties are conjointly to occupy the said residence.
Clause 4 of the agreement says: This agreement is not to interfere with the commercial or financial interests of the [O] Trust. Clause 5 explains how either party can give three months notice to the other to buy them out or return the funds and if there is no amicable agreement then the property is to be sold.
It explains that if this occurs a formula is to be used about the percentage monies to be paid to either party to the purchase of the property and that this percentage will be relevant to all matters regarding this property as from 19 May 2004 and includes all costs associated with the purchase and sale of division. This clause goes some way towards supporting the respondent’s position that they had had discussions about sharing the cost of their joint properties in proportions. It seems however to be inconsistent with the decision of the applicant to classify the respondent’s funds as a loan to a family trust.
Clause 6 states:
The [O] Trust is to provide current and full disclosure of any alterations to the trust thus ensuring [Ms Mueller] – (Ms Mueller) is aware of assets. Thus [Ms Mueller] can see that the [O] Trust has the assets to cover her loan.
It is noted at clause 7 that there was a three month interest free period and then there is another formula put in for the interest rates after that.
Clause 8 is interesting. It reads:
To secure the said loan, provision will be made by Mr Piper as trustee of [O] Trust to advise his mortgagor that a second mortgage will be lodged in favour of Ms Mueller securing the said $150,000 and any entitlement to increase in capital gain of the land and interest that she may become entitled to.
Whilst it suggests that there will be some security for the respondent, by way of a second mortgage, the following clause states:
Alternatively a caveat can be registered for this said purpose. The caveat will be prepared and registered immediately after the first mortgage -
Clause 10 explains what is to happen if the relationship fails. It explains:
Then it’s agreed that both parties will cohabitate together at the said residence until such time that the loan or buy out is paid out in full. At this time then [Ms Mueller] shall leave the residence if she is bought out, or both parties shall leave if the property is sold. Neither party shall pay rent.
There is a clause about legal action that reads:
If such terrible circumstances happen that Mr Piper becomes deceased, invalided or unable to hold office, his representatives, relations or relatives shall offer to Ms Mueller the choice of complete recovery of all of the said funds, including relevant capital gains and interest, or the option to buy the property completely from the [O] Trust. All conditions and terms mentioned above apply.
Each of the parties signed the agreement and it was witnessed by a qualified JP and signed on 25 July 2004. That is only two months after the auction of the property. The document is clearly drawn up by the applicant.
The applicant agreed that he had seen it and that he had signed it, but said that he doesn’t recall the document. I am satisfied that this document is designed to protect the applicant’s interests as opposed to those of the respondent.
Engagement – written agreement
In May 2005 the parties travelled overseas to the United States. They went shopping for an engagement ring. They bought a ring in Ohio and when they were on a plane at an airport in Los Angeles the applicant formally proposed to the respondent and gave her a ring.
The parties each agreed they were engaged in 2005. The applicant says that they remained engaged up until 19 August 2009 at which time the applicant says the respondent ended the engagement and gave back the engagement ring. He said:
“She returned the engagement ring to me. I had no prior warning about this decision on her part. I was not aware that she had not signed a financial agreement as at that date. Had I been so aware I would have requested the solicitor to withdraw my agreement to it because it demonstrated that she did not intend to get married to me.”[24]
[24] Applicant’s Affidavit filed 2 May 2012, paragraph 48.
The respondent denies that she ended their engagement as suggested by the applicant on 19 August 2009 and explains that she was not even in Brisbane on that date.
The respondent’s position is that they became engaged in 2005 and called it off after some disagreements on 19 August 2007 and that they got re-engaged in mid-2008 and then it was called off again as of 14 September 2009 as evidenced in their joint letter dated 18 September 2009 and signed off by both of them. The parties drew up this document and dated and signed it on 18 September 2009.
It reads:
“As of 14 September 2009 the engagement between Mr Piper and Ms Mueller was formally broken by both parties. The engagement ring was given back to Mr Piper, which he accepted and has kept in his possession. Mr Piper and Ms Mueller have managed to keep their friendship and both still reside at 13/24 Property H, [H]. Ms Mueller in the master bedroom and
Mr Piper in the visitor’s bedroom.”
That letter reflected what the parties did do. They did continue to reside together for a period and the applicant came and went. The applicant went to Western Australia and he came back again. The respondent says that in the interests of their ongoing friendship that she has always accommodated the applicant.
This is completely contrary to the applicant’s evidence that the respondent called the engagement off suddenly, and without notice on 19 August 2009, and that she threw the ring back at him.
The applicant was questioned closely about this document. Once again, he had a very poor memory and could not recall precisely being with the respondent and coming to an agreement about the end of their relationship. He said he thought he did sit down and discuss it, and when asked would it have been on 18 September 2009, said “I can’t say yes or no. I don’t recall.” When asked was he saying it may have been on 18 September 2009, he replied, “I can’t say when it was.” He had no recollection as to how this document came to his attention, only assumptions. He did not know who prepared the document, or where it came from.[26] Again, I regard his denials as false and I consider that he has been very selective memory.
[26] Transcript 19 November 2013, pages 21-23.
The applicant also on his own evidence states that they were first engaged back in 2004 and they remained engaged through to 2009, a period of five years, and agreed that the long period suggested that they were in no rush to get married and that it was a very long engagement.[27]
[27] Transcript 19 November 2013, page 21.
I found the applicant’s evidence overall as unreliable, vague and as I have said, he has an appalling memory, particularly for a person who has engaged in an active and comprehensive business life having had 12 different businesses as he explained to the psychiatrist, and who agreed with the psychiatrist’s description of him having an appearance of a competent and practised businessman and who is of above average intelligence, with attention and concentration above average.[28]
[28] Transcript 19 November 2013, page 56.
I also do not accept that this experienced businessman would sign off on a document setting out that the engagement was off as of 14 September 2009 if in fact it had been called off by the respondent on 19 August 2009, a month earlier, something he says he now remembers very well. I reject the evidence of the applicant that the respondent threw a ring at him and called off the engagement on 19 August 2009 as being false and inconsistent with his subsequent conduct. I also accept the respondent’s evidence that she was not even in Brisbane on that date.
I do not accept the assertion by the applicant that, because the respondent was photographed not wearing the engagement ring in Bali, that this is evidence that the engagement was called off. I accept her position that it was a valuable ring and she did not wish to travel overseas to a place such as Bali wearing a very valuable piece of jewellery, for her own safety.
Letter of April 2006, [M] to the respondent
The applicant wrote a letter in April 2006[29] and put it on the table for the respondent to read.
[29] Respondent’s Affidavit filed 24 October 2013, annexure 2.
The letter is actually undated in terms of any particular date and simply reads:
April 2006. Re: PRIVATE INVESTMENT $150,000.
Dear [Ms Mueller],
Further to our recent meeting I unfortunately have to confirm that due to negative business activities and liquidation of [M] in which you invested $50,000, any recovery of this value is now nil.
We sincerely thank you for your past support and understand your disappointment in the final result, however, the purchase of Property H, [H] has provided the remaining funds to now cancel the private loan as above.
The applicant admitted under cross examination that the respondent did not ever invest $50,000 in [M]. This letter illustrates yet again how the applicant acts to suit himself to the financial detriment of the respondent. The applicant says that he wrote the letter when he was trying to reduce stamp duty and trying to limit the availability of funds to the creditors. He says he was also trying to protect the house he was living in. The applicant repeated, at various times during the trial, as part of his mantra that:
“When we were together as one, we tried to keep our assets and our house together. I was always of the opinion that we were working together as one.”
The applicant could not recall why it was the $50,000.00 of the respondent’s that was lost. He could not explain why it was the respondent’s $50,000 that was lost, as opposed to any other creditor. He accepted that the respondent was not shown in the business records as a creditor of [M] Pty Ltd (his own company), and could not recall the basis of the letter being written. When pressed as to what was happening that prompted him to sit down and write a letter like that, he said that he had a lot of negative business activities, liquidation and court cases and he couldn’t recall. He also couldn’t recall when the liquidation occurred and when asked if he had any idea at all, said 2006. He couldn’t recall that he put the letter down on the table for the respondent, or that she was shocked to receive it.
Another of the applicant’s statements was: “Anything I’ve done I have done it to shelter Ms Mueller so that she could have a reasonable life.” This self serving statement is completely inconsistent with his conduct in depriving the respondent of what ought to have been a share in the ownership of the [H] property and treating the respondent’s funds of $150,000.00 as a loan to his family trust and then deciding without any reference to the liquidator or other creditors, the respondent’s money had been lost and the recovery of this value is nil. This statement contained on letterhead of [M] represented another decision by the applicant to change what the nature would be of the initial $150,000.00 advanced by the respondent to the applicant. This letter indicates that the funds were now to be regarded as a loan or investment in [M]. It seems to me that the applicant was very willing to use his private relationship with the respondent to prevail upon her to suit his own business affairs at will. It again demonstrates the applicant’s strength and position of advantage in the relationship with the respondent.
The applicant’s decision making to protect his own position continues in organising the respondent to buy the [H] property from him when his company was facing liquidation. In May 2006 the applicant told the respondent that he needed to repay bank debt, he needed to sell the [H] property and he feared what he would achieve in a fire sale. He suggested that the respondent buy the property from him at $850,000 which was to include $100,000 being what he regarded as remaining of his debt to the respondent.
The applicant accepted under cross examination that he intended to transfer the [H] property to the respondent because he was trying to protect the unit from creditors and he was facing liquidation at the time. It was suggested to him that he was looking to defraud creditors because [M] was in liquidation. The applicant stated “we were trying to keep it in our names.” This is a complete change of position for the applicant as up until this transaction, the [H] unit had never been “in our names.”
The applicant was questioned about his reason for then installing the respondent as a director of his company [H] and the respondent said it would be a good idea to keep it within “the family.” Prior to this time, the respondent had no involvement in the applicant’s companies.
He had to subsequently admit that it wasn’t just an altruistic idea. It was because his company was facing liquidation, he could no longer be a director. It was agreed that the applicant asked the respondent to be a director, but that he protected himself and maintained control by having the respondent pre-authorise a written resignation. The applicant says why he did this:
“I can only say I have had Ms Mueller’s interest at the forefront. I was aware that creditors might come in at different angles.”
I do not accept that this step was taken to protect the respondent. This was another business manoeuvre designed to enable the applicant to maintain control through the good grace of the respondent who has shown a willingness to comply with the applicant’s business requests of her. The respondent subsequently urgently sold another of her properties at [P] and there were two contracts signed off almost simultaneously. Those sales settled on 8 June 2006.[30] The first contract[31] the applicant causes [O] Trust to sell the [H] property to the respondent and the second contract is between the respondent and her purchaser.[32] The applicant’s solicitor is noted on the contract as Mr Joe Grasic of Bridge Brideaux Solicitors of Coorparoo.
[30] Respondent’s affidavit, paragraph 28.
[31] Annexure 3.
[32] Annexure 5.
Applicant relinquishes all interests in respondent’s property – written statement, 3 January 2008
The next document prepared is titled “Property Statement.” In it the applicant purports to relinquish all de facto and marital rights to the [H] property and any other properties purchased in the future from the funds arising from a sale of the [H] property. It reads:
“I, Mr Piper, wish to confirm that I accept that the property at Property H, [H], Queensland is the property belonging to Ms Mueller and that I, whether living in a de facto or a marital relationship with Ms Mueller, relinquish all de facto and marital rights to the property at Property H, [H], Queensland and any other properties purchased from the future monetary funds from the sale of Property H, [H].
I, Mr Piper, have been advised of my legal rights by a solicitor whom witnesses my acceptance of the above.”
It’s signed off by the applicant on 3 January 2008, witnessed by his own solicitor Joseph Grassich, of Bridge Brideaux Solicitors Coorparoo, Queensland 4151.
The document was not signed by the respondent. It illustrates the applicant’s intentions not to make any claim of any kind against the [H] property or any properties purchased from the sale proceeds. It supports the respondent’s position that they have always intended to arrange their business affairs so as they each retain their own assets. It is another document which is contrary to the applicant’s statement that he never considered it was necessary to have a formal agreement drawn up given their commitment to each other.
Agreement – undated
There is another undated document drawn up between the applicant and respondent. This one has the heading of “Financial Agreement between Ms Mueller and Mr Piper.”[33] This document reads:
“In May 2004 the above named started to live together at Unit Property H, [H]. It is agreed by both parties that the assets and chattels of each person is owned solely by that person, whether as an individual or in trust or companies. These assets and chattels cannot be raided, claimed, taken over or seized by the other party in any way, shape or form unless it is otherwise stated by way of a deed of joint ownership or some other written and signed documentation. That is to say that whatever assets and chattels Mr Piper and his trust or companies own are beyond any claim formed by Ms Mueller and her trust or companies. Whatever assets and chattels are owned by Ms Mueller and her trust or companies are beyond any claim formed by Mr Piper and his trust or companies.”
[33] Respondent’s Affidavit filed 24 October 2013, annexure 7.
That also is signed off by each party and witnessed by a Justice of the Peace. Neither party seems to know the date of that.
This is another document which confirms the testimony of the respondent that the applicant kept telling her words to the effect that he wasn’t going to make a claim, that he was just protecting her assets.
The Law
I have had regard to the following legislation.
Family Law Amendment Act 2000 – 27 December 2000
Part VIIIA was introduced into the Family Law Act (‘the Act”) by the Family Law Amendment Act 2000 (“the 2000 amendments”) commencing on 27 December 2000. For the first time, it enabled parties to enter into a binding financial agreement for some or all of the financial aspects of their relationship outside of the provisions of the Family Law Act.[34]
[34] Previous section 86.
The then Attorney General Daryl Williams QC, in his second reading speech made reference to the purpose of the amendments being to allow people to have greater control and choice over their own affairs in the event of marital breakdown.
Part VIIIA makes reference to parties entering into financial agreements before, during or after marriage, the relevant provisions being s.90B, 90C and 90D. Relevantly, s.90B (1) refers to financial agreements before marriage and refers to people who are contemplating entering into a marriage. Section 90G sets out the requirements which must be met before a financial agreement is binding under Pt VIIIA.
Family Law Amendment Act 2003 (Cth) – 14 January 2004
The Family Law Amendment Act 2003 (Cth) amended s.90G with effect from 14 January 2004 (“the 2003 amendments”). These amendments altered what had been required under the 2000 amendments in terms of the legal advice required. Initially, when the 2000 amendments were introduced, legal advice was required as to the advantages or otherwise of the agreement, whereas following the 2003 amendments, and the insertion of new 90G(1)(b) (ii), the number of matters on which advice was to be provided to the parties was reduced from four to two and it altered the nature of one of the remaining two matters. Significantly it altered the requirement of independent legal advice to advise on “the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement.” The 2003 amendments repealed s.90G (1)(b)(ii)-(iv) and inserted a new s.90G(1)(b)(ii).
Family Law Amendment (de facto financial matters and other measures) Act 2009 – 1 March 2009
On 1 March 2009 legislation, being the Family Law Amendment (De facto Financial Matters and Other Measure) Act 2009 (“the 2009 de facto amendments”) introduced division 4 of Part VIIIAB of the Family Law Act (“the Act”) enabling de facto spouses (heterosexual and same sex) to access the Family Law Act upon the breakdown of their relationship and entitling access to orders in relation to property and maintenance.
Prior to the introduction of the 2009 de facto amendments, under Part VIIIAB, de facto parties instituted proceedings through their respective state/territory jurisdictions. In Queensland, de facto couples could have resort to Part 19 of the Property Law Act upon the breakdown of their relationship prior to 1 March 2009, or through civil action based on equitable principles. The 2009 de facto amendments under Part VIII1AB relied on the relevant States referring power to the Commonwealth, pursuant to ss.51 (xxxvii) of the Constitutions.[35]
[35] Noting that some States did not refer.
The 2009 de facto amendments make reference to parties being able to enter into a financial agreement either when they are contemplating entering into a de facto relationship (s.90UB(1)), during a de facto relationship (s.90UC(1)) and after the breakdown of a de facto relationship (s.90UD (1)). It is the breakdown of the relationship that triggers the jurisdiction. These amendments apply to the relationship in question which broke down after 1 March 2009[36].
[36] Noting there is the provision to “opt in”.
Relevantly, s.90UC (1) states If (a) while in a de facto relationship, the parties to the de facto relationship make a written agreement about any of the matters mentioned in subsection (2) in the event of the breakdown of the de facto relationship; and (b) and (c) then the agreement is a Part VIIIAB financial agreement.
Section 90UJ refers to the requirements as to when a financial agreement (for those contemplating, during or after a de facto relationship) under Part VIIIAB is binding and is in similar terms to s.90G of the Act under Part VIIIA.
Section 90UJ (1) sets out the formal requirements of a binding financial agreement stating that subject to subsection (1A), a Part VIIIAB financial agreement is binding on the parties to the agreement, if and only if:
a)The agreement is signed by all the 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.
Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 – 4 January 2010
On 4 January 2010 the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 No. 122 of 2009 commenced (“2010 Efficiency Measures Act”).
The 2010 Efficiency Measures Act provisions were introduced in response to the Full Court decision of Black & Black[37] to address what was seen as the narrow and strict interpretation of the formal requirements of a binding financial agreement as decided in Black & Black.
[37] [2008] FamCAFC 7; (2008) FLC 93-357.
The second reading speech described the purpose being to ensure that those people who had made an informed decision to enter into an agreement, 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 purpose of the 2010 Efficiency Measures Act was later explained in Kostres & Kostres[38] as follows:
[38] (2009) FLC 93-420 at [165].
“…the amendments were designed to overcome the effect of the Full Court’s decision in Black & Black (2008) FLC 93-357 where the court applied a strict compliance test with relation to certain technical requirements for binding financial agreements made under the Act. One of the 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.)”[39]
[39] Wallace & Stelzer & Anor [2013] FamCAFC 199 [36].
The effect of the 2010 Efficiency Measures Act was that provision was made to (a) retrospectively validate agreements entered into prior to 2004, which might not have otherwise meet the strict requirements or technical deficiencies as per the approach in Black and Black and (b) introduce new provisions giving additional circumstances in which a financial agreement made on or after 14 January 2004 and before the commencement of item 9A, will bind parties to an agreement.
The effect of the 2010 Efficiency Measures Act was explained in Wallace & Stelzer at paragraph 32:
“Compared with the original 2000 and the 2003 versions of section 90 G(1) the requirements for a legal advisers statement in the agreement that the advice had been provided on “effect”, “advantage”,“prudent”,“fair and reasonable” (2000) or “effect”, “advantages and disadvantages” (2003) no longer applied under the Efficiency Measures Act; similarly, the requirements for an annexed certificate concerning the advice and provision of a copy of the agreement to the other side, no longer applied.”
Rather, what was required under the 2009 amendments was that legal advice had been provided as to “effect” and “advantages and disadvantages; the provision of a legal adviser’s statement that the advice had been provided; and a copy of that statement provided to the other side.”
Introduction of additional provisions ss.90G(1A) and 90UJ(1A)
The 2009 amendments also introduced additional provisions ss.90G(1A), (1B) and (1C) which conferred a new power on the Court to declare that the non-compliant agreement may nonetheless bind the parties.[40] It reads:
“90 G (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 he 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.
[40] Paragraph 34 of Wallace & Stelzer
(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.”
The additional provisions inserted under 90UJ (1A) mirror the provisions of 90G(1A) under Part VIIIAB. Section 90UJ (1A) came into effect in January 2004, almost a year after the 2009 de facto amendments had commenced initially on 1 March 2009.
Section 90UJ (1A) states that a part V1I1 AB 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.”
The provisions of the 2010 Efficiencies Measures Act affected financial agreements entered into between December 2000 and 4 January 2010. Schedule 5, item 8A dealt with transition provisions for agreements made on or after 14 January 2004 and before commencement of the 2010 Efficiencies Measures Act which was on 14 January 2010.
Relevantly, in relation to de facto financial agreements, Part 17, item one applies and states:
“(1) the amendments made by items 9A to 15A apply in relation to agreements made under s.90UB, 90UC or 90UD of the Family Law Act 1975 , and part V111AB termination agreements, made on or after the day on which item 1 of schedule 1 to (this Act) commences.”
And relevantly item 4 states:
“4. For an agreement made under s.90 UB, 90 UC or 90 UD of the Family Law Act 1975 before the commencement of this item, paragraph 90 UJ (1A) (b) of the Family Law Act 1975, as inserted by item 12A of this schedule, does not apply and the following paragraphs 90UJ (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.”
Also inserted under the efficiency measures Act, Schedule 5, Pt 1, is item 4A.
Therefore, by applying these provisions, whereas 90 UJ (1A) (b) provided: “One or more of paragraphs (1) (b) (c) and (ca) are not satisfied in relation to the agreement; after application of part 17 section (5), 90UJ (1A) (b) is to be read: “ (b) paragraph (1) (b) is not satisfied in relation to the agreement.” Essentially 90UJ (1A) (b) no longer requires reference to sub paragraphs (c) and (ca) in 90UJ (1).
In looking back at the development of this part of the Family Law Act, it can be seen that the de facto provisions under part V111AB, were not introduced until 1 March 2009.
The applicant signed the agreement on 7 August 2009 and the respondent on 21 August 2009. By that stage, the provisions in relation to part VIIIA financial agreements (which included s.90G) had been introduced nine years earlier pursuant to the 2000 amendments, and then amended by the 2003 amendments.
In his submissions, Mr Rounsefell for the respondent found difficulty in accepting why the 8A transitional provisions of the 2010 Efficiency Measures Act would apply to married parties and not also to de facto parties. It can be seen however, from the history set out earlier, that the legislation for de facto parties was introduced years later. By that time, the initial legislation introduced under the 2000 amendments had been amended by the 2003 amendments, which specifically repealed the initial 90G(1)(b) & (c). From then on, the nature of the legal advice was changed to, “advantage and disadvantage.” The initial description of the nature of the advice required was long gone by the time of the introduction of the 2009 amendments introducing Part VIIIAB. Mr Black of Counsel correctly submitted that the initial wording regarding the type of legal advice that was needed to be provided under Part VIIIAB did not ever include the phrase “financial or otherwise” and therefore the transitional provisions under 8A did not apply to part VIIIAB financial agreements.
However, that is not the end of the discussion. As Mr Black of Counsel also submitted, there are specific other provisions under the transitional provisions which do apply to agreements under ss.90 UB, 90 UC and 90 UD under Part VIIIAB namely Part 17, items 4 and 5.
The full Court in Wallace & Stelzer[41] proceeded to discuss the inconsistencies between item 8 and item 8A and other provisions which seemed internally inconsistent. Senior and Anderson[42] also discussed the meaning of the transitional provisions. In discussing item 8A, at paragraph 61, the Full Court referred to the supplementary explanatory memorandum which said:
“This amendment inserts new item 8A into Part 1 of schedule 5 to the Bill which will provide for additional circumstances in which a financial and termination agreement made on or after 14 January 2004 and before commencement of item 8A will bind the parties to the agreement. Amendments to the Family Law Act 1975 which commenced on that date change the matters about which spouses have to obtain prior independent legal advice for the agreement to bind them. Some legal practitioners continue to rely on precedents relating to the provisions of the Act as they stood before 14 January 2004 for agreements made for some time after that date. Sub items 8A(2), 8A (3), 8A (5) and 8A (6) will provide that the agreement binds the spouses if the prior independent legal advice obtained by one or both spouses was about matters on which an advice was required under the act to be obtained before 14 January 2004.”
[41] (2013) FLC 93-566.
[42] (2011) FLC 93-470.
The Full Court observed that a literal reading of item 8(6) and 8A (3) resulted in legislative provisions which were ambiguous and mutually inconsistent. Ultimately, the Full Court found that the proper construction of the provisions in that 8A (3) was a drafting error, had no effect and is to be read as being omitted.
The Full Court endorsed the findings of the trial judge, Justice Benjamin, who held at first instance in Wallace & Stelzer that the agreement in that matter would be a binding financial agreement on the basis of either of two approaches. Relevantly, the second basis, referred to at paragraph 72, part 2 states:
“(2) is by the application of item 8A in that the agreement, applied with the requirements of sub item 8A (2) because the parties had been provided with legal advice about the following matters as specified in that some item, being:
a) The effect of the agreement on the rights of that party;
b) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement;
c)whether or not, at that time, it was prudent for that party to make the agreement;
d)whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable; and
There was no necessity for compliance with sub item 8A (3).”
Their Honours stated at paragraph 73 essentially that they agreed with the trial judge that the 2009 amendments did operate retrospectively in relation to s.90 G and the appeal in regard to that ground, failed.
In Parker and Parker[43] Justice Coleman canvassed the authorities in relation to remedial legislation referred to the provisions of 90 G (1A) (b) and (c). His Honour stated that as: “remedial” or “beneficial” legislation, the sections should be construed “generously” to ensure that the “mischief” which the legislation seeks to address is remedied.[44] Hoult and Hoult [2013] FamCAFC also considered these provisions.
[43] [2012] FamCAFC 33.
[44] see DC Pearce & RS Geddes< Statutory Interpretation in Australia (Lexis Nexis Butterworths, 7th ed, 2011, at page 30.
The Agreement in question
The agreement was entered into in August 2009. If it was a Part VIIIA agreement, it falls within the transitional provisions under Part 8A applying to agreements entered into on or after 14 January 2004 and prior to 4 January 2010 apply.
In terms of s.90G, by application of the transitional provisions under Part 8A, to Part VIIIA agreements, the legal advice which is therefore required to be provided, will be sufficient even if it was not “advantages and disadvantages”, but “advantages or otherwise.” This was specifically referred to by the Full Court in Wallace & Stelzer.[45]
[45] Paragraph 72.2.
If the agreement was a Part VIIIAB agreement made pursuant to s.90UC, s.90UJ (1) sets out the requirements to be a binding financial agreement.
If the agreement does not strictly comply with the provisions of s.90UJ (1), it may still be binding by applying the provisions of s.90UJ (1A) which gives the Court a discretion to make a finding that notwithstanding such lack of strict compliance, the Court can declare that the agreement is binding, if it is satisfied that it would be unjust and inequitable for the agreement not to be binding on the spouse parties.
As explained earlier, for agreements entered into in August 2009, effectively, s.90UJ (1A) (b) is taken to read: “(b) paragraph (1)(b) is not satisfied in relation to the agreement”. Effectively reference to (c) and (ca) is not required.[46]
[46] Schedule 5, Part 17, sections 4 and 5 apply to financial agreements entered into before the commencement of the 2010 Efficiency Measures Act. The provisions of item 10 of Schedule 5 do not apply, and the provisions of 12A do not apply .
The nature of the legal advice to be obtained in August 2009, was governed by the provisions introduced in the 2009 amendments and that referred to financial advice being received as to the “advantages and disadvantages” rather than legal advice as to the “advantages or otherwise” which had only ever appeared in Part VIIIA s.90G (1) introduced by the 2000 amendments. This was then repealed under the 2003 amendments, effective from 14 January 2004.
Therefore, the transitional arrangements under Part 8A do not apply to de facto parties. It is not a matter of treating married and de facto parties differently, it is more about the timing of the introduction of the respective legislation and the subsequent amendments. The legislation has not, in my view, sought to treat married or de facto parties differently. Quite the opposite seems to be the case.
Is there an agreement and is it a binding financial agreement?
The authorities dictate that the onus of proof falls to the person seeking to uphold the financial agreement to prove that it is a binding financial agreement[47] In this matter, that is the respondent.
[47] Hoult & Hoult [2013] FamCAFC 109, [60].
The issues to be addressed are: (1) Is there an agreement (contract) between the parties; (2) Is there an agreement which qualifies as a “financial agreement” under “Part VIIIAB financial agreement” under the Act.[48]
[48] Pascot & Pascot [2011] FamCA 945 [19].
As the evidence has fallen in this trial, it is clear that the applicant had the agreement drawn up by his own solicitors. He has agreed that he has had his own legal advice. The applicant signed the agreement after giving instructions for the agreement to be drawn up, on 7 August 2009. Through his solicitors he forwarded it to the respondent’s solicitors. The respondent had her own legal advice. She signed the agreement on 21 August 2009. As set out elsewhere in these reasons, I do not accept that the engagement was called off on 19 August 2009, as alleged by the applicant.
I am therefore satisfied that there has been an offer by the applicant and acceptance of that offer by the Respondent. The document is in writing. I am not persuaded that there has been any intervening breach or purported condition or understanding as alleged by the applicant. I am therefore satisfied that the parties have entered into a concluded contract in the form of the agreement.
The issues raised by the applicant as to why the agreement is not binding are as follows:
a)The agreement contains reference to legal advice being obtained as to the “advantages or otherwise”, rather than “advantages and disadvantages”. I am referred to a decision of Justice Collier in J & J[49] in which the nature of the advice on each of these scenarios was held to be distinctly different and thus representing an incurable defect; and
b)The agreement is made pursuant to two sections being s.90 B and also s.90UC. The submission is made by the applicant that these two sections are distinctly different and that it is implicit within the terms of the Act that a single document cannot be both a “financial agreement” under s.90B and a “Part VIIIAB financial agreement” under s.90UC, rather, it must be one or the other. Reference is made to the expression that the agreement is “made under this section” and that to be made under two different sections does not comply with what is intended under the Act;
c)The respondent included the $150,000.00 as a loan in her financial affairs, forming part of the financial agreement, but did not show it also as increasing her own indebtedness. Also it is submitted that the applicant’s own figures of his liabilities is likely inaccurate.
d)Mr Black of Counsel for the applicant submits, it would not be unjust and inequitable if the agreement was not binding on the spouse parties.
[49] [2006] FamCA 442.
A) The nature of the legal advice
In dealing first with the submission about the nature of the legal advice provided, the history of s.90G and s.90UJ as explained earlier describes a pathway which can still enable the agreement to be binding. For agreements made pursuant to s.90B, the Court can apply the retrospective transitional provisions under Part 8A, to the requirements set out in s.90G which means the “advantages or otherwise” wording will survive and the s.90G requirements are satisfied.
As to the wording shown in the agreement, Counsel for the applicant is correct in that reference to “advantages, financially or otherwise” has never been the requirement for a Part VIIIAB agreement. I accept that the single judge decision of J & J, a decision 8 years ago now of Justice Collier confirms that in the circumstances of that case, His Honour was not satisfied that the appropriate advice had been given. Having read that decision closely, I accept that His Honour was not satisfied that the appropriate advice had been given. I am not, however, satisfied that His Honour was troubled by the difference between the expression “advantages financially and otherwise” and advice as to the “advantages and disadvantages”. Rather, it seems to me His Honour was concerned with the issue of what was actually showing on the certificate relating to what advice was given. The issue of the different kinds of advice provided, and the essential difference between them, is discussed at paragraph 27 of His Honour’s decision which reads:
“Mr Harrison very persuasively says that if I look at paragraph 1.15.2 particularly I can take that to mean that the advice that was given was whether or not the agreement was to the financial advantage or otherwise of the husband. He argues that those words in that form must mean, if the advice was given as to financial advantage or otherwise in a financial sense, that “otherwise” must mean disadvantage. On the face of it there is some force in that argument. The certificate however omits commas that clearly appear in the repealed subsection. That subsection referred to advice as to whether the agreement was to the advantage, financially or otherwise, of the party receiving the advice. For what it is worth, the certificates annexed also contain the commas where I have indicated.
I am not able to be satisfied therefore that paragraph 1.15.2 of the agreement can of itself establish to me that the advice that was given was advice that meets the requirements of the existing subsections (1) (i) and (ii)” (emphasis added).
The meaning of the word “otherwise” is defined in the Macquarie dictionary as including: in another manner, differently, in other respects.[50] In the context of “otherwise” following “advantages” it is not difficult to accept that this would conceivably include the disadvantages.
[50] Susan Butler, Macquarie Australian Encyclopaedic dictionary (The Macquarie Library Pty Ltd, 2006.
In the circumstances of this case, I am inclined to the view that the nature of the legal advice more than likely included disadvantages as encompassed in the term “otherwise”.
His Honour’s decision and discussion as seen in paragraphs 19 onwards of his decision is in line with the strict approach adopted by the Full Court in Black and Black. It is this strictness and narrow approach that was intended to be addressed by the introduction of the 2010 Efficiency Measures Act.
I am satisfied that in the matter in question, that each party had legal advice also about the disadvantages of the agreement
B)Financial Agreement under both s.90B and s.90UC
In relation to the assertion that the agreement cannot be made under two separate sections and is therefore technically flawed, support for this proposition is said to be found by reference to the decision of Justice Young in Sullivan & Sullivan.[51] In that matter the status of one of the parties was different from the other at the time of signing, in that the wife signed the agreement prior to marriage and the husband signed the agreement after marriage. In dealing with the question as to whether the agreement constituted a financial agreement under ss.90B (contemplating marriage) or 90C (during marriage), His Honour concluded that the financial agreement was not a financial agreement within the meaning of the relevant sections of the Act; and not binding.
[51] [2011] FamCA 752.
I have considered this submission and the circumstances in Sullivan & Sullivan. I find that I am able to distinguish the circumstances in Sullivan from the scenario in the present case. In the present case, the parties did not have a different status to each other at the time they each signed the agreement. I am satisfied, accepting the evidence of the respondent over that of the applicant for the reasons explained earlier, that both parties were still engaged when they each signed the agreement. Further, I am not satisfied that the two provisions, s.90B and s.90UC are mutually exclusive. Section 90B refers to those “contemplating marriage.” These parties were engaged and therefore contemplating marriage. Section 90UC refers to making a financial agreement whilst in a de facto relationship. These parties were in a de facto relationship. I am not satisfied that by making an agreement under both of these sections of the Act, that this is a fatal technical error or fatal to the agreement. The parties in this matter fitted in my view, squarely under each section.
One could imagine the argument if only of those sections was noted in the agreement. The party wishing to be relieved of the obligations under the financial agreement could simply argue a different section should have been identified as the relevant section, rather than the one that was included on the financial agreement. These parties were both simultaneously engaged and living in a de facto relationship. Whilst I accept that upon their ultimate marriage, the agreement would cease to be binding, pursuant to s.90UJ (3), neither of these parties gave any evidence about any impending marriage. The applicant agreed that they had been engaged for years and were in no rush to marry, and the respondent stated that the act of being engaged was a commitment in itself.
In all of the circumstances therefore I do not accept that s.90UJ (3) is a barrier to both sections being included in the agreement. I do not accept that the agreement is flawed or not binding because it is expressed to be under these two sections. It seems to me that these are the type of technical issues that lead to the introduction of the Efficiency Measures Act 2010 which was in response to Black and Black, which illustrates what the legislators intended in this remedial legislation, which was not a narrow strict interpretation of the requirements of an agreement.
C) Accuracy of the statement of assets and liabilities
The third issue raised by the applicant in support of his position that the agreement is not a binding agreement, involves possible errors in each party’s schedule of liabilities attached to the agreement. The respondent was questioned about the accuracy of her liabilities as shown in the schedule attached to the Agreement in question. In particular, the respondent was quizzed about whether or not she had properly recorded the advance of $150,000.00 to the respondent.
I am satisfied that the Respondent increased her overall indebtedness to acquire funds to give to the applicant to enable the [H] property to be purchased. The respondent was asked whether she transferred the $150,000 to the respondent from her line of credit to give to the applicant or his solicitors. The applicant replied “yes.”[52]
[52] Transcript 19 November 2013, page 92.
Later she was queried as to where she showed this amount on her schedule of liabilities. The respondent gave $150,000.00 to the applicant by way of a funds transfer from her line of credit, without any contemporaneous written agreement explaining the terms of the advance. The respondent in my view is financially naïve and clearly placed all her trust in the respondent as she just waited to hear about the contract.[53]
[53] Transcript 19 November 2013, page 92, line 20.
When asked about the money she advanced, in the context of her assets and liabilities in the first schedule to the agreement, gave evidence that she included the $150,000.00 as a debt owed to her from the Respondent as seen in the documents. When she was asked whether the amount of borrowings of $150,000 was also reflected in the liabilities shown, she agreed the borrowings increased the line of credit. The respondent did show her line of credit at $260,000 on the schedule[54]. I am not therefore persuaded that the respondent has failed to include details of her borrowings. I am also not persuaded that an issue of serious non-disclosure has occurred. In the context of the information provided by the respondent, I am not persuaded that the gravity of this technical fault is such that it would result in this agreement not being binding.
[54] Transcript 19 November 2013, page 134, lines 5-10.
As well, the applicant points to factual inaccuracies in the agreement, being his own inaccuracies relating to the size of a mortgage being shown at $800,000.00 towards the purchase of the [H] property, whereas in fact “the applicant borrowed about $535,000.00 towards the purchase and then applied about $270,000.00 from the [O] Trust towards the purchase.” It is submitted that this inaccuracy works against the respondent because it portrays his financial position as being less than what it truly was. The applicant’s evidence has fluctuated about how much he had to borrow to purchase the [H] property as seen elsewhere in this judgment.
The applicant now wishes to raise his own mistake as to how much his debt really was, as a reason for the agreement not to be upheld. The applicant has given under oath various versions of events surrounding his borrowings, and now wishes to rely on which ever one suits his purpose. The applicant is flexible depending upon his purpose. It seem unjust that the applicant can be selective as to which version of his inconsistent evidence of the facts he now choses to rely upon.
Further, I am not convinced that the applicant’s self-described errors and inaccuracies bear upon the binding nature of the agreement. These two mature adults have had their own legal advice. The evidence is that the respondent knew very little if anything about the applicant’s companies. They are essentially technicalities, having no real relevance to the parties decision to enter into the agreement, given that both parties received legal advice and the applicant especially, was not mislead.
Is it unjust and inequitable for the agreement not to be binding under s.90UJ(1A) (mirror provision of s.90G(1A))
Section 90UC (1A), the 2010 Efficiency Measures Act enables reference to the consideration of whether it would be unjust and inequitable for the agreement not to be binding, even though the description of the type of legal advice required is not satisfied, and provides that it is not necessary to consider existing sections (c) and (ca) due to the Part 17, items 4 and 5 provisions of the transitional provisions.
As to whether it would be unjust and inequitable if the agreement is not binding, Mr Black submits that the respondent has not pointed to any other circumstances that would make it unjust and inequitable if the agreement was not binding, and that the failure to identify any other circumstances is understandable, and her reliance on s.90UJ(1A) must fail.
I am satisfied that each of the parties signed various agreements from time to time during their relationship. All of them stated that the applicant would not be making a claim on the respondent’s assets. I do not accept that the applicant was under any pressure to enter into these earlier agreements. I accept that they spoke about agreements and that on occasion, the applicant had legal advice about entering into those agreements, and that he indicated his intention through those agreements not to claim on the respondent’s property.
I am satisfied that in fact the applicant has always had the upper hand in the financial affairs of this relationship. The applicant has shown that through stealth and deceit, he acquired the [H] property on terms where the ownership remained 100% with him and his trusts, to the exclusion of the respondent. The respondent had every basis to believe that she was a part owner of the [H] property given their discussions about buying a property together and his request to her to put in additional money to the purchase price, having asked her: “Do you really want this property?” (emphasis added)
Likewise, I am satisfied that the applicant’s conduct in subsequently characterising the money put in to the purchase by the respondent as a “loan” not even to him, but to a trust of which he had 100% control shows his preparedness to exploit his personal relationship with the respondent as a mechanism to advance his own interest of that of his companies and trusts to the detriment of “the woman I love.”
I am also satisfied that the applicant’s subsequent sole decision to advise the respondent that her “investment of $50,000.00 was lost” was a cavalier decision made by the applicant, again exploiting the personal relationship he had with the respondent. The respondent’s conduct in this regard was driven by self-interest, and without regard to the position in which he left the respondent in. The respondent had never invested in the applicant’s company [M] Pty. Ltd.
So too was the decision of the applicant to have the respondent appointed as a director at a time when he was not able to. I am satisfied that the applicant took advantage of the respondent based on their personal relationship and her being somewhat naïve in business. The applicant always had the upper hand in this relationship, as demonstrated in much of his conduct and dealings with the respondent, including his obtaining from the respondent a signed resignation as a director, which he held for his own future use at any time he saw fit.
Ultimately, only when the applicant’s financial position is crumbling, does he then decide that he wants to keep the [H] apartment “in the family.” Up to that point in time, the respondent has certainly not been treated like “family”. In my view she was regarded as a source of funding for the acquisition of assets for the applicant’s trust, and as a creditor, could have her funds written off at the stroke of a pen at a time decided by the applicant.
Mr Rounsefell for the respondent submits that it would be unjust and inequitable if the agreement were not binding on the spouses. His primary submission is that it would be to the disadvantage of the respondent if the agreement that the parties entered into was not upheld. Mr Rounsefell submits that the parties got advice; they each saw solicitors, that the documents make it abundantly clear that each party wanted to keep their own assets, that both parties were adults, that they have each been advised that they knew what they were doing and that having gone to all the trouble of seeking advice and being advised it would now be unjust and inequitable for the document to be held invalid.
Mr Rounsefell says that it was the intention of both parties that this agreement would deal with their financial arrangements and that neither of them would have resort to the Family Law Act
I accept the force of Mr Rounsefell’s submissions.
Overwhelmingly it is clear to me that the applicant’s conduct is unconscionable in that he has unilaterally made decisions to his own advantage and to the respondent’s disadvantage. In considering the issue of whether it would be unjust and inequitable if the agreement was not binding on the spouse parties, there are overlapping considerations in terms of also consideration whether the respondent has engaged in unconscionable conduct when seeking to set aside the agreement.
After considering all of these circumstances I am satisfied that it would be unjust and inequitable if this agreement is not binding between the spouse parties. Further I am satisfied that it would be unconscionable for the agreement not to be upheld.
The agreement is therefore a binding financial agreement.
Should the agreement be set aside pursuant to s.90UM (1) (e ) – void voidable, unenforceable or s.90UM (1) (h) unconscionable conduct
Mr Black of Counsel makes submissions that if the financial agreement is found to be a binding financial agreement, that he then relies on conduct of the respondent to satisfy the provisions of s.90UM (1)(e) and s.90UM (1) (h) that the respondent engaged in conduct that was in all the circumstances, unconscionable in placing illegitimate pressure on the applicant to enter into the agreement.
The Court has a discretion to set aside an agreement under s.90UM(1) which states: A Court may make an order setting aside, for the purpose of this Act, a Part VIIIAB financial agreement or a Part VIIIAB termination agreement if, and only if the Court is satisfied that:
(e) the agreement is void, voidable or unenforceable; or
(h) in respect of the making of a Part VIIIAB financial agreement – a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable.
Unconscionable conduct is referred to in the landmark case of Commercial Bank of Australia v Amadio[55] where Mason J explained in cases of undue influence “the will of the innocent party is not independent and voluntary because it is overborne”, whereas in cases of unconscionable conduct:
“… the will of the innocent party even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position… Though not deprived of an independent and voluntary will, [the innocent party] is unable to make a worthwhile judgment as to what is in his best interest.”
[55] [1983] HCA 14: (1983) 151 CLR at 461.
In Commercial Bank of Australia v Amadio Justice Deane stated:
“The respondents sought to invoke the equitable jurisdiction which is raised “whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconcientiously takes advantage of the opportunity thus placed in his hands:. Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 at p 415, per Kitto J. In that case Fullagar J, (1956) 99 CLR, at p 405 said that the circumstances adversely affecting a party which may induce a court of equity to set aside a transaction are various and cannot be satisfactorily classified. To those mentioned by Kitto J. he added age, sex and lack of assistance or explanation where assistance or explanation is necessary. Perhaps in the context of this case should be added unfamiliarity with the English language. See Carello v. Jordan (1939) QSR 204. What is necessary for the application of the principle is exploitation by one party of another’ position of disadvantage in such a manner that the former could not in good conscience retain the benefit of the bargain.”[56]
[56] Page 489.
Given that I have found that the parties entered into a binding financial agreement, and that they each had legal advice, I am satisfied that this agreement would not be void.
The applicant submits that the agreement was affected by undue influence or unconscionable conduct and is voidable or unenforceable. It is submitted that the respondent used some illegitimate means of persuasion and that was why the applicant entered into the agreement. The applicant relies on the decision of Pascot & Pascot[57] and the comments of Justice Le Poer Trench in this regard.
[57] [2011] FamCA 945.
The applicant submits that:
(a) the evidence is that the respondent asked the applicant to sign a financial agreement on a number of times, and that he would not agree;
(b) The respondent made it clear that the applicant would have to sign if he wanted the marriage to go ahead;
(c) In July 2009 the applicant was struggling with depression, and out of work. In this period he had to renegotiate a purchase he had made for an apartment off the plan which added to his stress; the applicant had back pain and days before signing had attended for a cat scan and surgery had been recommended;
(d) The respondent “presented” the financial agreement in July or early August 2009 to the applicant and said words to the effect “if you don’t’ sign the agreement, then it’s over. You might as well move out;”
(e) The respondent knew of the applicant’s difficult situation and despite that, she presented the applicant with an ultimatum that left him feeling like he had no choice and the respondent in this manner, used “illegitimate means of persuasion;”
(f) Alternatively, the applicant was suffering a special disadvantage vis-à-vis the respondent, and the respondent took unconscientious advantage of that opportunity. On either view the financial agreement should be set aside.
In support of opposing the agreement being set aside due to the unconscionable conduct of the respondent, Mr Rounsefell points to the conduct of the applicant throughout the entirety of the parties’ relationship and submits that the applicant has not been influenced by the respondent’s opinions on any issue. He submits that the applicant made all of the decisions entirely on the basis of his own personal interest, rather than in the interest of the parties as a couple or without reference to the interests of the respondent.
He refers the Court to:
a)The circumstances surrounding the applicant’s purchase of the Property H, in a trust of which he alone was trustee, whilst using the respondent’s $150,000.00 as the only equity;
b)the applicant’s subsequent written advice to the respondent that she should write off $50,000.00 of what he characterised as a loan to himself as trustee for the [O] Trust, because one of his companies was in liquidation;
c)the applicant’s suggestion and request that the respondent should replace him as a director of [H] Pty. Ltd when he could not at that time act as director, whilst at the same time having her write out her resignation as a director, to be held by the applicant and used at his discretion;
d)his subsequent decision to sell the [H] apartment to the respondent only at a time that suited his circumstances when he was being pressed by the bank to reduce debt which necessitated the respondent engaging in an urgent sale of her existing [P] property to finance the purchase of the [H] apartment;
e)his decision to ignore the advice of the respondent that he was engaging in risky financial conduct, when he entered into purchase of a residential investment unit at [omitted] in the name of one of his companies, for $1,654,000.00 with a view to on-selling it before settlement was due;
f)the respondent suffering a back injury at work (when he turned in his chair at work one afternoon) and advising the respondent that he expected to receive a minimum compensation payout of $200,000.00 in the months immediately before signing the financial agreement on 7 August 2009;
g)despite this alleged back injury, he engaged in vigorous physical activities of white water rafting in Bali without restraint or complaint in the first week of September 2009.
Mr Rounsefell submits that the Court would accept the evidence of the respondent that she has never engaged in pressing the applicant to sign a financial agreement by saying that unless he did so, she would not marry him or alternatively saying that he should sign or else move out of the [H] property.
Mr Rounsefell also submits that there were no wedding plans and the applicant was not motivated to sign the financial agreement by any promise of marriage.
Discussion
The applicant filed his application to set aside the agreement, on the basis set out in his affidavit, that he was essentially forced to sign the agreement which had been prepared by the respondent and presented to him.[58] Initially, the respondent did not query that she had organised her solicitors to draw up the agreement, as was set out in the applicant’s affidavit. I accept the respondent’s evidence which she gave candidly under oath that she had been confused initially about whose solicitor drew up the financial agreement in question. However, on seeing the back sheet of the agreement and noting it was not her solicitor, but rather the applicant’s the respondent then realised that her solicitors had drawn up a previous agreement but not this agreement. I do not accept that the respondent presented the agreement in July or early August 2009 to the applicant and said words to the effect “if you don’t sign the agreement, then it is over, you might as well move out”.
[58] See submission as well at para.212 (d) of this judgment.
The applicant has engaged in various business transactions in the time he alleges his depression made him vulnerable to be able to be pressured the respondent. There is no evidence to support the assertion that his depression meant he could not make decisions or was susceptible to pressure. His conduct demonstrates that he continued to make business decisions and exercise his own will. He managed to re-negotiate contractual obligations he entered into to purchase a unit off the plan when prices crashed and the original unit chosen became far too expensive for him. His psychiatrist noted in terms of his past psychiatric history that the applicant stated “he had had trouble with depression before his accident at work, he was prescribed Lovan by his GP but was not comfortable taking it and stopped shortly after commencing.”
I am not persuaded that there has been any coercion by the respondent towards the applicant. There is no evidence that satisfies me that the applicant was under duress or that he had been coerced to enter into this agreement by the respondent. The evidence that the applicant had the agreement drawn up and signed the agreement first, then sent to the respondent, who signed it when she returned from the Sunshine Coast after attending at her solicitor’s office to do so, is entirely inconsistent with the allegations made by the applicant. I accept the respondent’s denials that she did not make any threats to the applicant at or before he signed the agreement.
I do not accept that the applicant was ever overborne by the respondent at all or to the extent that he was forced to sign or enter into the agreement. There is no evidence that would satisfy me that the respondent engaged in illegitimate or any means of inappropriate persuasion to have the applicant sign the financial agreement. The applicant’s evidence in this regard is unpersuasive and generalised. Each of the parties are mature adults. They clearly entered into various understandings recorded by them. The respondent may have really wanted a binding financial agreement to protect her own assets. Even if the respondent did ask the applicant to enter into an agreement, and she did it more than once, I am not satisfied that this request in the circumstances of this case, constitutes illegitimate pressure. The respondent has not engineered a situation where she is the beneficiary of a significant amount of the applicant’s assets. The agreement simply provides for her to keep her own assets.
There was nothing in the agreement that the applicant was to give the respondent under the terms of the agreement. There was instead, clause 16, which the applicant agrees (and which I consider is highly likely to be) drawn up to his advantage or protection.
I do not accept that there were threats made by the respondent, as alleged requiring the applicant to sign the agreement or the respondent would call off the relationship or the engagement. There was nothing about the applicant’s evidence that caused me to consider that he was going to be heartbroken or upset if the relationship or engagement was called off. There is no evidence that marriage plans were ever discussed. Certainly no marriage was imminent. The applicant said in his own evidence, he was in “no rush to marry.” They had been engaged for years on his evidence, and engaged on and off for years on the respondent’s evidence. Their engagement was, I accept, called off back in 2007 and re-engagement occurred in 2008 as per the testimony of the respondent and called off on 14 September 2009, as recorded.
I find that the applicant’s assertion that he” felt powerless”, and that he had to sign a financial agreement otherwise he would lose the woman he loved, to be completely hollow and without foundation.
I have had regard to the applicant’s alleged depression, and the alleged pain from his back injury, the stress he says he was under in announcing retrenchments whilst he was at work prior to his back injury, and that he says he was under pressure to re-negotiate the purchase of another apartment off the plan. I note he renegotiated his own contract. He had taken on this venture to buy a unit off the plan contrary to the warnings of the respondent who considered his conduct risky. There is no suggestion that he was overborne in doing what he wanted to do with this unit.
I am not satisfied that the circumstances or conditions amounted to the applicant being the weaker party, or being at a “special disadvantage.” Nor do I consider that the respondent took advantage of any opportunity that presented itself at any time or at all in regards to the applicant. I am not persuaded that the respondent took advantage of the applicant to pressure him to sign or enter into an agreement. I do not accept that the respondent has acted in an unconscientious or unconscionable way towards the applicant at all. She has in fact, supported him in agreeing to his financial requests of her, during the relationship. She continued to support him after they separated and remained under the one roof, by physically nursing him post operation and enabling him to continue to have a home.
I am satisfied that the applicant well understood the terms of the agreement he entered into, that it was drafted on his instructions, that he then signed the agreement having had his own legal advice and sent the agreement on to the respondent for her signature.
I have had regard to the agreements that the parties entered into prior to entering into the agreement. The wife gave evidence that she had another agreement drawn up prior to this one, and that the applicant refused to sign it.
The applicant is a worldly business man of many years standing. The agreement does not require him to pay significant sums to the respondent, rather, it protects the assets owned by the respondent from a claim by the applicant.
In relation to the submission by Mr Black of Counsel on behalf of the applicant that the applicant was overborne by the respondent in entering into this agreement, I reject that submission. I accept the applicant may have been taking medication for depression for a short period. I accept that he says he had a back injury. However on the scant evidence I have of the injury, I am satisfied that the applicant has likely overstated the impact that the back injury had upon him, given that he travelled to Bali for a holiday with the said back injury, and went white water rafting, which is not an activity I would have expected someone with a severe back injury to have engaged in. Whatever the level of his injury was, I at no stage had the impression that this relationship was ever such that the applicant was overborne by the respondent or that he was the weaker party, or that his medical conditions were such that the he was placed in a position of being the weaker party, or that the respondent was able to take advantage of the applicant at all. Quite the reverse is the position.
Moreover, I do not accept that the respondent has placed undue pressure or illegitimate pressure upon the applicant in order to force him to sign or enter into a financial agreement, or at all.
In terms of the agreement being void or voidable, Mr Black of Counsel submits that there is some similarity between this matter and Blackmore & Webber.[59] That matter involved a pre-nuptial agreement being produced for signature less than five days before marriage, when the bride to be was four to five months pregnant, and where the parties were due to return to Thailand where her family expected her to return as a married woman, and where the wife’s visa was about to expire and she would not be able to return to Australia. These circumstances are decidedly different to the circumstances in this case.
[59] [2009] FMCAfam 154.
These parties were not a young couple when they entered into the agreement. They were mature adults and each had previous relationships and each had been through family law system. The applicant who has been married twice before, was not in a position of special disadvantage.
I am not satisfied that any threats were issued by the respondent to cause any fear or alarm to the applicant. I am not satisfied that the respondent was in a position of power over the applicant, in fact I am satisfied that the applicant had the upper hand in their business association. I am not persuaded that either of the applicant’s alleged medical conditions placed the applicant in a position of any disadvantage in his dealings with the respondent.
The applicant has the onus of proof in establishing that the respondent has engaged in conduct that would satisfy the court that the financial agreement is void or voidable. To prove actual undue influence, it must be shown that one party had the capacity to influence the other improperly, that this in fact occurred, and that the transfer was a result of the influence: Johnson v Buttress.[60] This is not a matter where the applicant has given over all of his property or in fact anything to the respondent in the agreement.
[60] (1936) 56 CLR 113, 134.
I consider that the applicant has failed to establish his assertions in this regard.
I am not satisfied that the respondent has engaged in any unconscionable conduct at all, or any unconscionable conduct that has placed illegitimate means or persuasion on the applicant.
I am not satisfied that the respondent has engaged in any conduct which would render the agreement, void or voidable or unenforceable.
Taking in to account my findings in this matter, it is clear that I am not satisfied that the agreement should be set aside on the basis of it being voidable or unenforceable and this submission must fail.
Similarly, I am not satisfied that the respondent has engaged in any unconscionable conduct at all, I am not satisfied that the respondent has placed illegitimate means or persuasion on the applicant. This submission must also fail.
I am not satisfied that the binding financial agreement should be set aside pursuant to s.90UM (e) or (h).
Conclusion
Having considered the evidence in this matter, for the reasons referred to in this judgment, I therefore answer the questions posed in the following manner. Those questions are:
(a)whether the purported agreement is a “Part VIIIAB financial agreement” within the meaning of that term under the Family Law Act (“the Act”);
Answer: The Court is satisfied that the agreement is a Part VIIIAB agreement within the meaning of that term under the Act;
(b)Whether the purported agreement is binding on the parties under s.90UJ of the Act;
Answer: The Court is satisfied the agreement is a binding financial agreement on the parties pursuant to s.90UJ.
(c)Whether the purported agreement should be set aside under s.90UM(1) (e) or s.90UM(1)(h) of the Act;
Answer: The Court is not satisfied that the agreement ought to be set aside pursuant to s.90UM (1) (e) or (h) of the Act.
The Court intends to make declarations accordingly.
I certify that the preceding two hundred and thirty-nine (239) paragraphs are a true copy of the reasons for judgment of Judge Willis
Associate:
Date: 3 December 2014
[25] Respondent’s Affidavit filed 24 October 2013, annexure 9.
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