Quincey & Quincey
[2024] FedCFamC1A 30
•15 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Quincey & Quincey [2024] FedCFamC1A 30
Appeal from: Quincey & Quincey [2023] FedCFamC2F 791 Appeal number: NAA 205 of 2023 File number: BRC 10033 of 2021 Judgment of: TREE J Date of judgment: 15 March 2024 Catchwords: FAMILY LAW – APPEAL – Binding Financial Agreement – Where the husband appeals from an order setting aside the agreement on the basis that there had been material non-disclosure by him – Where the husband contends that the primary judge was restricted to the sole non-disclosure issue advanced by the wife in her pleadings – Where cases are determined on the evidence, not the pleadings – Where the husband contends the primary judge erred in fact in making the non-disclosure finding – Where the fact another judge may have reached a different factual conclusion does not mean the finding was not reasonably open on the evidence – Whether wife was estopped from denying the financial agreement was binding – Where it was implicitly conceded that if non-disclosure was established the estoppel claim fell away – Appeal dismissed – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) ss 79, 90C, 90G, 90K Cases cited: Bain & Bain (Deceased) (2017) FLC 93-772; [2017] FamCAFC 80
Banque Commerciale SA EN Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11
Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
Browne v Dunn (1893) 6 R 67
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Jess & Jess (2021) FLC 94-055; [2021] FamCAFC 159
Kuhl v Zurich Financial Service Australia Ltd (2011) 243 CLR 361; [2011] HCA 11
LC and TC (1998) FLC 92-803; [1998] FamCA 47
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Prysmian Cavi E Sistemi SRL v Australian Competition and Consumer Commission [2018] FCAFC 30
Water Board v Moutsakis (1988) 180 CLR 491; [1988] HCA 12
Number of paragraphs: 86 Date of hearing: 20 December 2023 and 11 March 2024 Place: Cairns (via video link) Counsel for the Appellant: Mr Hackett Solicitor for the Appellant: Ramsden Lawyers Counsel for the Respondent: Mr Hartnett Solicitor for the Respondent: Genuine Legal ORDERS
NAA 205 of 2023
BRC 10033 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR QUINCEY
Appellant
AND: MS QUINCEY
Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
15 MARCH 2024
THE COURT ORDERS THAT:
1.The Notice of Appeal filed 4 August 2023 is dismissed.
2.The appellant is to pay the respondent’s costs in the sum of $21,415.95 within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Quincey & Quincey has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
On 10 July 2023, a judge of the Federal Circuit and Family Court of Australia (Division 2) made an order setting aside a binding financial agreement between the parties (“BFA”). By Notice of Appeal filed 4 August 2023, Mr Quincey (“the husband”) appeals from that order, and seeks that the BFA be declared binding.
Ms Quincey (“the wife”) resists the appeal.
For the reasons which follow, the appeal will be dismissed.
BACKGROUND
The wife is presently 37 years of age, and the husband 46. They commenced their relationship in 2009 and married in 2010. There were two children born to the relationship, presently 12 and 9 years of age.
On 30 April 2018, the parties signed the BFA.
On 19 April 2019, the parties finally separated, and pursuant to his incorrect understanding of the terms of the BFA, the husband commenced paying the wife her entitlement totalling the sum of $80,000 by monthly instalments of $5,000. (According to the BFA, it should have been paid monthly from 30 April 2018, but nothing turns on that).
On 29 July 2021, the wife commenced proceedings in the Federal Circuit Court of Australia (as the Federal Circuit and Family Court of Australia (Division 2) was then titled) seeking to set aside the BFA. It is from the subsequent order of that court that the husband appeals.
THE PRIMARY JUDGE’S REASONS
The primary judge was satisfied that the BFA was a financial agreement as defined in s 90C of the Family Law Act 1975 (Cth) (“the Act”) (at [48]).
Her Honour then addressed the question of whether it was binding on the parties under s 90G of the Act. Having extensively traversed the relevant evidence, the primary judge was not satisfied that the wife was provided with the independent legal advice required by s 90G(1)(b) (at [114]) and hence the BFA was not binding.
Her Honour next proceeded to consider whether it would nonetheless be unjust and inequitable if the BFA were not binding on the parties (s 90G(1A)) concluding that she was not so satisfied (at [131]).
Her Honour finally considered a further argument advanced by the wife that, in any event, the BFA should be set aside for material non-disclosure by the husband (s 90K(1)(a) of the Act), ultimately being satisfied that there was such non-disclosure (at [144]).
Accordingly the BFA was set aside (Order 1).
THE APPEAL
There are 5 grounds of appeal advanced by the husband, with Ground 5 only being advanced after the hearing of the appeal was adjourned on 20 December 2023 to enable it to be formulated and argued.
The first ground challenges the conclusion that the wife had not received the required independent legal advice.
The second ground contends that the primary judge failed to determine a pleaded dispute between the parties, namely the husband’s claim that the wife was estopped from denying that the BFA was indeed binding, by virtue of her having taken the benefit conferred on her under its terms.
The third ground challenges the primary judge’s conclusion that it would not be unjust and inequitable if the BFA were not binding on the parties.
The fourth and fifth grounds challenge the primary judge’s finding that there had been material non-disclosure by the husband.
It is convenient to commence by considering Grounds 4 and 5 and then Ground 2, because as shall be seen, it then is unnecessary to address Grounds 1 and 3, as their outcome could not affect the disposition of the appeal.
Grounds 4 and 5
These grounds provide:
4.The trial judge erred in finding non-disclosure by [the husband] in terms of s90K(1)(a) of the Act by failing:
(a)to explain why the net asset pool had reduced by $564,299 in a matter of weeks;
(b)to disclose any purported loan to his parents; and
(c)to disclose why his savings were reduced from $458,000 to a mere $7,000 between 21 March 2018 and 4 April 2018;
prior to [the wife] signing the financial agreement on 30 April 2018, when the sole issue for determination was whether at the time of signing the financial agreement [the husband] had $500,000 in his personal bank account.
5.The trial judge erred in finding non-disclosure by [the husband] in terms of s90K(1)(a) of the Act by failing:
(a)to explain why the net asset pool had reduced by $564,299 in a matter of weeks;
(b)to disclose any purported loan to his parents; and
(c)to disclose why his savings were reduced from $458,000 to a mere $7000 between 21 March 2018 and 4 April 2018;
prior to [the wife] signing the financial agreement on 30 April 2018 and based upon that finding, setting aside the financial agreement signed on 30 April 2018 and that finding was contrary to the evidence which the trial judge accepted, demonstrably wrong by reference to incontrovertible facts or uncontested testimony, was contrary to compelling inferences and based upon findings not argued below by [the wife].
Ground 4 depends upon a premise that the “sole issue” which the primary judge was restricted to considering was whether the husband had “$500,000 in his personal bank account” at the time the BFA was signed.
Some more context is necessary to understand this challenge. A convenient starting point is the pleadings. Relevantly the wife’s Counterclaim provided:
5.During the relationship, the [husband] had absolute control over all the family finances.
6.On numerous occasions throughout the relationship, the [husband] told the [wife]:
a.that she was not entitled, and would never be entitled to the [husband’s] money;
b. that the [wife] contributed to nothing to the relationship;
c. That everything the [wife] owned was his as he was the one who purchased it.
7. The [husband] withheld money from the [wife] when she upset him.
8.The [husband] also organised a system whereby the money that he provided to the [wife] would be deducted by him as a means of penalising the [wife] when she did something to upset the [husband].
9.In the weeks leading up to the signing the BFA the husband’s mother, sister and sister’s husband all phoned the [wife] and verbally abused her, insisting that she sign the [BFA].
10.During the phone call from [the husband’s mother], she said, “you are nothing” it is all [the husband’s] money”, “you must sign all documents”, “you are nothing without him.”
…
12.Also at the time of signing the [BFA] the [husband] had the sum of five hundred thousand dollars ($500,000) in his personal bank account which he did not disclose to the [wife].
…
Material non-disclosure; s 90K(1)(a)
17.The [BFA] is silent:
a.with respect to disclosure given or made by either both parties with respect to the nature of their financial circumstances as at the date of the [BFA];
b.as to whether either or both parties had chosen not to exercise the option of requesting that the other provide them with financial disclosure of all property and interest in property owned or believed to be owned by them;
c.as to whether either or both parties had satisfied themselves about the financial interests of the other party.
18. The [wife] repeats and relies on the following paragraphs above:
a. Paragraphs 5-10
19.In those premises, the [BFA] was entered into as a result of the [husband] failing to make material disclosure to the [wife], and should be set aside.
(Wife’s Defence and Counterclaim filed 1 December 2021)
It is noteworthy that paragraph 18 does not repeat and rely upon paragraph 12.
The husband’s Reply and Answer denied all of those assertions (Husband’s Reply and Answer filed 10 December 2021, paragraph 5).
Notwithstanding the vague, limited and unparticularised pleading in relation to non-disclosure, cross-examination of the husband ranged over broad issues relevant to non-disclosure.
From that cross-examination and other evidence, the following facts appear to be uncontentious:
(a)In around September 2017, while the parties’ relationship was still intact, albeit fraught, the husband engaged solicitors to draft a BFA;
(b)The information which he provided to them contained a schedule of assets and liabilities which showed that the husband had:
(i)$458,000 in 3 bank accounts;
(ii)total assets worth $1,393,000;
(iii)only one liability, being a CBA mortgage over the parties’ home in the sum of $470,000;
(iv)net assets of $923,000
(c)On 13 October 2017, the parties briefly separated following an incident to which the police were called, the incident arising from the parties arguing about financial matters;
(d)On 24 October 2017, while the parties were still separated, the wife’s solicitors advised the husband that they represented her;
(e)Between 14 and 17 November 2017, whilst the parties were separated, the husband transferred $323,396.85 USD to his parents;
(f)In December 2017 or March 2018, the parties reconciled;
(g)Thereafter the parties negotiated the BFA. In the course of those negotiations the husband again provided the solicitors drafting the BFA with information, including a schedule of assets and liabilities, which disclosed that the husband had:
(i)$7,000 In bank accounts;
(ii)total assets of $854,000;
(iii)save for the payment to the wife, only one liability, being the CBA mortgage over the then matrimonial home in the sum of $495,000;
(iv)net assets of $279,000 including the $80,000 to be paid to the wife;
(h)The BFA was signed on 30 April 2018;
(i)On 22 June 2018, the husband’s father transferred to him the amount of $323,396.85 USD;
(j)On 19 April 2019 the parties finally separated and a separation declaration was given by the husband to the wife;
(k)On 25 January 2020, the husband and his parents entered into a loan agreement which purported to record that on an unspecified date, the parents had loaned the husband $323,396.85 USD;
(l)On a date which is unclear, save that it post-dated the commencement of these proceedings, the husband for the first time disclosed a purported loan agreement between himself and his parents dated 12 January 2016, under which they loaned him the sum of $350,000 USD interest free, repayable in 10 years.
The primary judge ultimately concluded as follows:
144.I am satisfied that the husband failed to disclose a material matter prior to the wife signing the financial agreement on 30 April 2018. He failed to explain why the net asset pool had reduced by $564,299 in a matter of weeks, failed to disclose any purported loan to his parents and failed to disclose why his savings were reduced from $458,000 to a mere $7000 between 21 March 2018 and 4 April 2018 prior to the wife signing the financial agreement on 30 April 2018. I found his evidence with respect to the loan to his parents and his failure to adequately explain the reduction in the net asset pool an attempt to mislead. I am satisfied that the husband’s failure to disclose created a substantially different financial agreement to the first draft financial agreement that the wife had discussed with the husband in September 2017. I am satisfied that the husband mislead the wife with respect to the parties net assets a matter material to the financial agreement prior to the wife executing the agreement. For those reasons I am satisfied that the financial agreement signed on 30 April 2018 should be set aside.
Ground 4 challenges those findings, and particularly it is said that “the finding was based upon matters not pleaded. In those circumstances the [primary] judge failed to determine the case as framed: Bradie & Bradie [2012] FamCAFC 220” (Husband’s Summary of Argument filed 23 October 2023, paragraph 23).
This argument is misconceived. In Banque Commerciale SA EN Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 296–297 Dawson J said:
It is, of course, the purpose of pleadings to define the issues between the parties so that they may know the case which they have to meet and in order that the proceedings upon trial may be conducted in an orderly fashion by reference to those issues. The defined issues provide the basis upon which evidence may be ruled admissible or inadmissible upon the ground of relevance. But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings. It is incumbent upon the trial judge to see that the pleadings or particulars are amended so that the record reflects the proceedings as they have been conducted, but his failure to do so will not result in the invalidity of those proceedings: Dare v Pulham (1982) 148 CLR 658 at 664; Water Board v Moustakas (1988) 62 ALJR 209 at 211; 77 ALR 193 at 197; Leotta v Public Transport Commission (NSW) (1976) 50 ALR 666 at 668; 9 ALR 437 at 446; Maloney v Commissioner for Railways (NSW) (1978) ALJR 292 at 295; 18 ALR 147 at 151.
(Emphasis added)
Both before and after that decision, many other cases have stated identical principles, of which Prysmian Cavi E Sistemi SRL v Australian Competition and Consumer Commission [2018] FCAFC 30 at [69]–[73] (adopting Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133 at [50]–[52]) is but one example.
Plainly the husband did not oppose the admission of the relevant evidence, although after the pertinent cross-examination of the husband had concluded, his counsel noted that, despite no objection having been raised, nonetheless all of that evidence was irrelevant (Transcript 4 May 2023, p.105 lines 15–16). There is no doubt that the relevant evidence was not rejected by the primary judge. Whilst it may have been irrelevant to the pleadings as they then stood, once it was admitted, it was relevant material able to be relied on by the primary judge. Moreover, the husband himself attached the relevant purported loan documentation to his affidavit filed 31 August 2022, which squarely precipitated the lines of cross-examination by counsel for the wife.
Ground 4 therefore fails.
As to Ground 5, in substance it complains that the primary judge erred in fact in making the findings at [144]. To succeed, the husband would need to persuade me that those findings were not reasonably open on the evidence (Edwards v Noble (1971) 125 CLR 296). More, in cases involving issues of credit, a finding of fact will only be disturbed if it is contrary to incontrovertible evidence, uncontested facts or compelling inferences, or glaringly improbable (Fox v Percy (2003) 214 CLR 118 at [28]–[29](“Fox v Percy”).
It is useful to unpack [144].
Firstly, the primary judge rejected that there was a loan between the husband and his parents, at any point in time.
Secondly, her Honour rejected that the transfer of $323,396.85 USD by the husband to his parents (between 14 and 17 November 2017) was the repayment of a loan.
Thirdly, the primary judge was satisfied that at the time of entry into the BFA, the $323,396.85 USD was an asset of the husband, although held by his parents.
Fourthly, the primary judge accepted that in negotiating the BFA, the husband understated his assets by the sum of $323,396.85 USD.
It can be seen that conclusions two, three and four all flow from the first conclusion. As to that, contrary to the challenge made by this ground, there was no evidence which compelled the acceptance of the existence of any loan to the husband by his parents. Rather, there was evidence which might have led to a finding that there had been, or were, two loans, but the primary judge was not compelled to accept it, and did not accept it, as truthful.
Adopting the terms used in this ground, the primary judge’s rejection of the existence of a loan (and the ultimate finding of non-disclosure that followed) was not inconsistent with the evidence her Honour did accept, with the incontrovertible facts, or contrary to compelling inferences.
To the contrary, that finding was supported by:
(a)The failure of the husband to disclose any liability comprising a loan to his parents in the course of negotiating the (never concluded) 2017 BFA;
(b)The failure of the husband in the lead up to the BFA to disclose that in November 2017, he had purportedly repaid a loan to his parents;
(c)The oddity that the transfer of funds from the husband to his parents in November 2017 was not consistent with the terms of the asserted 2016 loan agreement, but rather apparently prompted by police involvement after the parties had separated;
(d)The fact that the husband’s father only re-transferred the monies which the husband had transferred to his parents in November 2017, after the BFA was executed; and
(e)The absence of any mention of a 2016 loan agreement until after these proceedings commenced.
Whilst other judges may have reached different factual conclusions on the evidence, it cannot be said that the finding was not reasonably open to her Honour. In so concluding I do not overlook the arguments raised by the husband in his Supplementary Outline filed 22 January 2024 at paragraphs 2–11, but they do not speak to the relevant findings not being open.
Adopting the terminology of the husband there are two limbs to this ground. The first being that the non-disclosure finding was contrary to the evidence and demonstrably wrong by reference to incontrovertible facts, and the second being it was demonstrably wrong by reference to uncontested testimony.
Turning to the first limb (contained within paragraphs 2–11 of the husband’s Supplementary Summary of Argument ) he makes three submissions in support:
The first submission is that the wife’s non-disclosure case (which at the time was confined to her assertion that the husband had $500,000 in his personal bank account that he failed to disclose) was not established on the facts. Respectfully, this is a repetition of Ground 4 and must be rejected for the same reasons. That this particular assertion was not made good on the facts does not impugn the ultimate finding of the primary judge.
The second submission is that her Honour in considering s 90K(1)(a) did not turn her mind to two pieces of evidence:
(a)The terms of the agreement (insofar as they provide that both parties had accepted each other’s estimates);
(b)The conduct of the parties in implementing the agreement following separation (in particular that the agreement had been implemented at the request of the wife post-separation).
To put it bluntly, the husband’s argument in actuality is that the evidence tends to a different conclusion, not that the finding of the primary judge was not reasonably open on the evidence. It is not enough to displace a factual finding to establish a differing view (Fox & Percy at [17]).
The third submission is that the non-disclosure finding was not established on the evidence at all. It is aided by the brave argument that the shortfall in the husband’s declared savings in the final BFA when compared to the 2017 draft agreement was itself a form of disclosure. Notwithstanding the audacity of that submission, the husband is doing no more than proffering an alternate conclusion, which falls well short of the requirement of establishing that the finding of the primary judge was not reasonably open on the evidence. The argument is rejected.
At paragraphs 12–15 of his Supplementary Outline, and in his oral submissions, the husband focussed upon the second “contrary to uncontested testimony” limb of this ground. Particularly he relied upon the lack of any cross-examination of his mother as to the purported loan (his father did not give evidence). Significantly he contends that the so-called rule in Browne v Dunn (1893) 6 R 67 (“Browne v Dunn”) precluded any rejection of the version of events his mother gave evidence about.
The mother’s evidence was relevantly as follows:
Loan to [the husband]
19.On 22 June 2018, my husband and I loaned [the husband] $323,396.85 for the purposes of discharging his home loan so he was not required to pay bank interest. This loan was formalised by way of a loan agreement which gave rise to our ability to lodge a mortgage over [the husband’s] property if we needed to.
20.Annexed hereto and marked “[ME]-11” is a true and correct copy of my and my husband’s bank statement showing the funds being transferred to [the husband] on 21 June 2018.
21.In Country B, loan agreements between relatives such as the only my husband and I entered into with [the husband], are not required to be prepared or checked by a lawyer. The loan agreements can be verbal or written.
22.In accordance with the terms of the loan agreement, [the husband] is required to repay us by the end of this year (2022) however given the ongoing conflict in Country B, there is significant risk associated with transferring money to Country B.
…
My communication with [the wife]
26.My husband and I have wanted to loan [the husband] funds to discharge his mortgage so [the husband] did not have to pay interest although [the husband] told us not to transfer the funds until he had an agreement with [the wife] about the loan and repayment to us. For this reason I have known that [the husband] and [the wife] were taking steps to prepare a Financial agreement in 2017.
(Affidavit of Ms E filed 31 August 2022)
The husband’s mother was not required for cross-examination. Accordingly this evidence was not directly challenged. However that is only part of the story.
Before the husband’s mother’s affidavit was filed, on 25 August 2022 the wife had filed an affidavit. Although not directly in evidence before me, in the husband’s subsequent affidavit filed 31 August 2022, he refers to, and responds to, various allegations made in that 25 August 2022 affidavit.
Thus at paragraph 5, the husband said:
5.Due to the issue in dispute being the validity of the Financial Agreement, in this Affidavit, I respond only to the matters contained in [the wife’s] Affidavit filed on 25 August 2022 ([‘the wife’s affidavit’]) which relate to the validity of the Financial Agreement. I have not responded to each statement made by [the wife]. The matters not addressed in this Affidavit are not admitted or agreed by me.
Thereafter at paragraphs 86–89, the husband said:
86. Paragraph 43 and 44
a.I disagree that I used funds which I had on 30 April 2018 to discharge the mortgage secured over my [Suburb C] Property.
b.I say that in June 2018, almost two months after the signing of the Financial Agreement, I entered into a loan agreement with my parents to borrow funds sufficient to discharge the mortgage secured against the [Suburb C] Property to avoid accruing interest. My parents and I entered into a loan agreement to give effect to this arrangement and the funds were transferred to me on 22 June 2018.
c.Annexed hereto and marked "[HQ]-14" is a true and correct copy of the translated loan agreement and bank statement showing the funds arriving in my account on 22 June 2018.
d.The funds which were loaned to me were transferred from my father's account number ending [...01]. The statement for this account for the period 7 November 2017 to 21 May 2018 is annexed and marked "[ME] -11" to the Affidavit of my mother filed on 31 August 2022. The funds were originally deposited into my Father's Account on 17 November 2017 (from my Father's separate account) and then transferred to another deposit account belonging to my Father in Country B. The funds were then transferred to me on 21 June 2018. I am currently making arrangements for the deposit slip showing the transfer to me to be translated into the English language and have instructed my solicitor to tender the translated deposit slip at the Defended Hearing, if necessary. My bank statement showing the funds arriving in my account on 22 June2018 is contained on page 206 of [the wife’s] Affidavit.
e.I spoke to [the wife] about this loan.
f.My bank balance prior to receiving the funds from my parents was $570.75 as evidenced on the first line of the bank statement which is annexed.
g.I am unable to comment on the discussions my parents had with Ms Quincey however my parents were not in Australia in December 2018. My parents were in Australia in December 2017. I am aware of this because I booked their flights. Annexed hereto and marked "[HQ]-15" is a true and correct copy of my parent's flight itinerary from December 2017.
87. Paragraph 45:
a.I dispute [the wife’s] allegations that I fabricated evidence.
b.At the time I entered into the loan agreement with my parents, [the wife] and I had entered into the Financial Agreement but were still married and I had no reason to fabricate evidence.
88. Paragraph 46:
a.I say that the schedule of assets and liabilities contained in the Financial Agreement contained all my assets, liabilities and superannuation as at the time we entered into the Agreement which was in April 2018.
b.I disagree that I withheld any information from the schedules which were contained in the Financial Agreement.
89. Paragraph 47:
a.I disagree and say that the schedule of assets and liabilities contained in the Financial Agreement was accurate as at the time of entering into the Financial Agreement.
b.At the time of entering into the Financial Agreement, I had a mortgage with the Commonwealth Bank of Australia and this was listed as a liability.
c.I entered into the loan agreement with my parents in June2018 and my parents lent me funds in June 2018. Therefore, at the time of the Financial Agreement, I did not have a liability owing to my parents.
Subsequently the wife filed a further affidavit on 13 September 2022, which was the affidavit relied upon by her at trial. It too raised allegations of non-disclosure, and disputed the existence of a loan between the husband and his parents. It is unclear whether the relevant paragraphs in the wife’s 25 August 2022 affidavit coincide with those of her 13 September 2022 affidavit, but I assume that either they do, or substantially do.
Although it would have been better if the wife’s affidavit of 25 August 2022 had been before me, nonetheless the relevant paragraphs of the wife’s 13 September 2022 affidavit include:
Disclosure when signing the Agreement
38.As noted above D Lawyers did not advise me that I was entitled to seek and provide financial disclosure which I consider was fundamental given steps taken by the Husband after the Agreement was executed with regards to the [Suburb C] property (“the former matrimonial home”).
39.The Husband is the legal owner of the former matrimonial home which was acquired during the relationship. Annexed hereto and marked “[WQ]-09” is a copy of the Title Search for this property.
40.Post signing the Agreement, I also discovered and readily believe at the time of signing the Agreement the Husband had in his personal bank account the sum of five hundred thousand dollars ($500,000). This was not disclosed and is not specified in Schedule 1 of the Agreement.
Annexed hereto and marked “[WQ]-10” is a copy of Schedule 1 of the Agreement setting out the Husbands assets and liabilities at the time of executing the Agreement.
41.I did not know where he had obtained this sum from or where it was being kept. I was not informed about the exchange of financial disclosure process by D Lawyers so did not know I could request his bank statements which could have identified these funds.
42.Neither the Husband nor I had exchanged any financial disclosure prior to the Agreement being signed. I say that this information was deliberately withheld from me because he did not want me to know the full extent of his assets in case I received advice that the Agreement was not just and equitable which could have impacted my decision whether to sign it.
43.After the Agreement was signed the Husband used this sum of money to pay off the mortgage with CommBank for the former matrimonial home and to the best of my knowledge this property is mortgage free.
44.On 14 October 2021 I instructed my solicitors to enquire with the Husband in relation to the $500,000 sum. In response on 4 November 2021 the Husband’s solicitor responded and advised me that his parents had apparently given it or lent it to him, however, I do not believe this to be true because he told his parents during the Christmas party in 2018, when they arrived in Australia to see us, that he does not have any home loan. I was surprised, and his parents were surprised too. He had paid it over a very short period after the signing of the Binding Financial Agreement. It is clear to me that his parents did not give him the funds as they were surprised by his news that he had no home loan. Annexed hereto and marked “[WQ]-11” is a copy of the correspondence from my solicitors, the Husband’s solicitor’s response, loan agreement and his bank statements which he provided.
45.I note that there is an alleged Loan Agreement between the Husband and his parents but I say that it has likely been fabricated to support the Husband’s position that he was lent the money rather than him withholding information from me about the assets he had when the Agreement was executed.
46.At the time of signing the agreement the Agreement Schedule contains lists of each parties assets and liabilities did not contain disclosure with respect to the above sum and I was not aware of it. I am of the view that the Husband intentionally withheld information related to the above sum and that he had that amount in his bank account from me so as to exclude it from the Agreement.
47.Even if his parents gave him or lent him the money I understand this should have been disclosed to me in relation to the Agreement and listed as a liability, noting the mortgage was listed in the liabilities portion of his schedule in the Agreement.
(Emphasis in original)
Proceeding from the assumption that the wife’s 25 August 2022 affidavit was in substantially similar terms to those paragraphs, then the wife’s allegations were all on the table when the husband’s mother filed her affidavit on 31 August 2022, and yet she only traversed them in a limited way.
Significant objections to the wife’s 13 September 2022 affidavit were successfully advanced at trial, and much of the material in the paragraphs recited above was ruled inadmissible, although a little confusingly, the husband’s response to the wife’s 25 August 2022 affidavit was nonetheless relied upon by him, and before the primary judge.
The husband’s mother was not required for cross-examination, however the husband was. The relevant exchanges in his cross-examination appear in the transcript between pages 82 and 99 of the transcript. It is clear from those pages that, although much of the wife’s evidence had been excluded, nonetheless it formed the basis for her counsel’s cross-examination of the husband, although no concessions were made by him.
Whilst the evidence was able to be concluded in one day, submissions were made in writing, and the court did not receive any oral submissions.
The husband led off with written submissions filed 11 May 2023, followed by the wife’s submissions on 26 May 2023. The husband then filed submissions in reply on 2 June 2023:
At paragraphs 43, 45 and 52 of the wife’s submissions she said:
43.It was put to the husband in cross-examination that the loan agreements were a devise used to conceal assets from [the wife]. It is submitted that the Court should conclude that that is so in circumstances where:
(a)as at September 2017, when the parties were recording their assets and liabilities, [the husband] clearly never considered he had any obligation of indebtedness to his parents – given that he never recorded it in his ‘liabilities’ schedule in the Fact Find document or version 1 of the draft Agreement (exhibits A1, A2 and A3);
(b)his motivation for transferring the amount of 323,396.85 USD was because of the involvement of police in commencing proceedings against him for a protection order by way of the PPN (or, alternatively, because [the wife] had started pre-action procedures for property settlement); and
(c)the 323,396.85 USD was subsequently re-advanced to him, less than two months after the financial Agreement was executed by way of a purported new loan agreement.
…
45.The [wife’s] submission is that the husband’s course of conduct in concealing his financial position, amounts to the non-disclosure of a material particular.
…
52.It is ultimately submitted that the [husband] failed to disclose a material particular within the meaning of s 90K(1)(a). Worse, he deliberately concealed his financial position.
In his reply, the husband said:
4.The submissions in paragraphs 43 and 45 of the [wife’s] Submissions do not confront or address the sole issue raised on the pleadings and the unchallenged evidence highlighted in paragraphs 21 to 26 of the [husband’s] Submissions. Notably, there is no footnote referring to the transcript to support the first sentence of paragraph 43 of the [wife’s] Submissions. What was in fact put was “I am going to suggest to you that these loan agreements actually evidenced no indebtedness to your parents at all.” That proposition was denied by the [husband]. The conclusion proposed by the [wife] in paragraph 43 is simply not open:
(a)on the evidence highlighted in paragraphs 21 to 26 of the [husband’s] Submissions;
(b)because of the above exchange; and
(c)the [husband’s] initial loan from his parents had been repaid prior to the Financial Agreement being finalised and therefore, quite properly, not included in the Schedule at the [husband] explained.
(Footnotes omitted)(Emphasis in original)
Notably, there is no suggestion made in that paragraph (or elsewhere in the husband’s submissions in response) that the failure to cross-examine the husband’s mother precluded the submission at [43] from being advanced, and particularly no Browne v Dunn point was raised. Had it been raised, the wife could have sought to re-open the trial to cross-examine the husband’s mother. As the Full Court observed in Jacks & Samson (2008) FLC 93-387 (“Jacks v Samson”) at [236]:
236.In MWJ v R (2005) 222 ALR 436 ; [2005] HCA 74 the High Court per Gummow, Kirby and Callinan JJ stated at [40]:
Reliance on the rule in Browne v Dunn can be both misplaced and overstated. If the evidence in the case has not been completed, a party genuinely taken by surprise by reason of a failure on the part of the other to put a relevant matter in cross examination, can almost always, especially in ordinary civil litigation, mitigate or cure any difficulties so arising by seeking or offering the recall of the witness to enable the matter to be put.
The Browne v Dunn point, not being the case the husband advanced at trial, cannot now be raised for the first time on appeal (Metwally v University of Wollongong (1985) 60 ALR 68). More, it is a point which could have been met by evidence (Water Board v Moutsakis (1988) 180 CLR 491).
In any event, as I have alluded to above, it is not accurate to describe the husband’s mother’s evidence as unchallenged, as it was apparently contradicted by the wife in her 25 August 2022 affidavit, and again in her 13 September 2022 affidavit. Where a trial is conducted by evidence-in-chief on affidavit, the rule in Browne v Dunn does not apply: LC and TC (1998) FLC 92-803 (“LC & TC”) at [38]. There the Full court said:
38.In any event, it must be said that the rule in Browne v Dunn does not apply where the witness is on notice that the witness's version of events is in contest. That notice may come from the pleadings or the other side's evidence or the other side's opening; it may even come from the general manner in which the case is conducted. In general, however, this exception to the rule should only operate where the issue is a fairly clear and obvious one (see Seymour v Australian Broadcasting Commission 19 NSW LR 219 at 224-5 per Glass JA, Trade Practices Commission v Mobil Oil Australia Ltd (1984) 3 FCR 168 at 181, Jagelman v FCT (1994) 31 ATR 467 at 472-3, and Raben Footwear Pty Ltd v Polygram Records Inc 145 ALR 1 at 15).
Jacks & Samson is consistent with LC & TC, and Jess & Jess (2021) FLC 94-055 at [170] is not authority to the contrary.
Whilst the rule in Browne v Dunn applies to a judge hearing the case (Bain & Bain (Deceased) (2017) FLC 93-772 at [127] quoting Kuhl v Zurich Financial Service Australia Ltd (2011) 243 CLR 361 at [72]) here the allegation was not first made by the primary judge, but had been live for nearly a year by the time of judgment.
It follows that the “contrary to uncontested testimony” limb of Ground 5 is not made out.
As to whether the findings in [144] were “based upon findings not argued below by [the wife]” one need only consider the extracts of her written submissions recited above to realise that is simply not correct.
Grounds 4 and 5 both fail.
Ground 2
This ground provides:
2.The trial judge erred in failing to determine whether [the wife] was estopped from denying that the financial agreement was binding pursuant to s 90G of the Act.
I have already observed that the case before the primary judge was subject to a regime of pleadings, and addresses were in writing.
The husband’s Statement of Claim relevant to this ground provided as follows:
12.In the premises, the [BFA] is a financial agreement which is binding upon the [wife] and [husband] pursuant to s 90G of the Act.
13.In 2019 following separation, the [wife] and [husband] implemented the terms of the agreement by:
(a)the [husband] paying the [wife] the sum of $80,000 pursuant to the [BFA] at the request of the [wife]; and
(b)the [wife] accepting and retaining the sum of $80,000 paid by the [husband] to the [wife] pursuant to the [BFA].
…
16.In the premises of paragraphs 12 and 13 above, the [wife] is estopped from denying that the [BFA] is a financial agreement which is binging upon the [wife] and [husband] pursuant to s 90G of the Act.
(Husband’s Statement of Claim filed 10 November 2021)
The wife’s Defence pleaded:
9.As to the allegations contained in paragraph 12 of the Statement of Claim the [wife] denies the agreement is binding as the [wife] did not receive the required independent legal advice pursuant to s 90G(b) of the Act as per paragraph 6(a)-(f).
10.The [wife] admits the allegations contained in paragraphs 13, 14 and 15 of the Statement of Claim.
11. The [wife] denies the allegations contained in paragraph 16 of the Statement of Claim and states that if the [BFA] is deemed to be binding, the [wife] states:-
(a)the [BFA] was obtained by undue influence from the [husband];
(b) the [BFA] was obtained by undue influence from the [husband’s] family members;
(c)the [husband] misrepresented his list of assets and liabilities in the [BFA];
(d) the [husband] failed to disclose a material matter to the [wife].
(Wife’s Defence and Counterclaim filed 1 December 2021)
The short answer to this ground is that, having found that the BFA was not binding upon the parties’ pursuant to s 90G of the Act, the estoppel claim fell away as it rested upon that foundational premise. The primary judge was not thereafter obliged to further traverse the equitable claim in the hypothetical.
However the longer, but equally complete, answer is quite independent of the finding under s 90G of the Act. Plainly the wife’s defence to the estoppel claim relied upon the husband’s misrepresentation of his assets and liabilities (paragraph 11(c) and (d)).
In her written submissions, she expanded upon that plea as follows:
Estoppel not available
53.The [husband’s] behaviour should also prevent him from relying on estoppel as a defence. The ‘assumption’ or ‘state of affairs’ relied on by the [husband] (being that the [wife] would accept the [BFA] according to its terms) proceeds from the agreement being formed by way of the [husband] concealing his financial position from her.
54.On the [husband’s] case the ‘inducement’ that the [wife] occasioned (in the sense described in Waltons Store (Interstate) Ltd v Maher (1998) 164 CLR 387 (see Brennan J’s judgment at 428-429) is that she would agree to be bound by the [BFA] in circumstances where the [husband] alone knew he had concealed his asset position from her. The underlying doctrine of estoppel is best in ‘good conscience and fair dealing’ (Deane J at 434). If the Court is satisfied that the [husband]did act to conceal his asset position (and thus not disclose a material particular within the meaning so s 90K(1)(a)) equity will not ground relief in estoppel.
(Wife’s Written Submissions filed 26 May 2023)(Emphasis added)
Now whilst it is true that the primary judge did not expressly adopt that argument, on a practical level, she was not obliged to explicitly do so, as all that the husband said in his reply submission was:
5.The alleged non-disclosure, which is not established, is not an answer to [the husband’s] estoppel plea as submitted in paragraphs 53 and 54 of [the husband’s] Submissions.
(Husband’s Written Submissions in Response filed 2 June 2023)
In other words, it was implicitly conceded that, if non-disclosure was established, it was an answer to the estoppel plea.
Even if the primary judge did err by failing to determine the estoppel plea, such that the appeal must be allowed in part, the appropriate course would be for me to determine the matter on the basis of the undisturbed findings and relevant evidence.
So long as the finding of non-disclosure remains intact, the claim of estoppel would fail. Firstly, there is no evidence of irremediable prejudice suffered by the husband if the wife is not estopped from resiling from the BFA, since if the wife’s entitlement under s 79 of the Act is less than the $80,000 she received under the BFA, then it can be accommodated by an order under s 79. If her entitlement is more, then axiomatically it must be a just and equitable outcome (s 79 of the Act). It is difficult to see that a just and equitable division of property is an irremediable prejudice.
But secondly, and more significantly, the husband plainly does not come seeking equitable relief with clean hands, rather instead seeking equity in aid of enforcing an agreement infected by his material failure to disclose. Upon any rehearing, I would therefore invoke that discretionary bar so as to decline to extend any equitable relief which the husband seeks.
Ground 2 fails.
Grounds 1 and 3
Given that success on Grounds 1 and 3 would still see the appeal dismissed, it is not necessary to consider these grounds further (Boensch v Pascoe (2019) 268 CLR 593 at [8]).
OUTCOME
The appeal will be dismissed.
COSTS
In the event the appeal failed, the wife sought that the husband pay her costs in the sum of $21,415.95, which the husband conceded both as to outcome and quantum. Those costs should be paid within 28 days.
I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 15 March 2024
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