Raleigh & Raleigh
[2015] FamCA 625
•30 July 2015
FAMILY COURT OF AUSTRALIA
| RALEIGH & RALEIGH | [2015] FamCA 625 |
| FAMILY LAW – PROPERTY – FINANCIAL AGREEMENT – Where the husband seeks a declaration that the 2003 financial agreement is binding – where the wife seeks an order that the agreement be declared not to be binding or that it be set aside pursuant to s 90K Family Law Act 1975 (Cth) – Where the certificate by the wife’s lawyer contained an error – Where the wife was not provided with independent legal advice about the effect of the 2003 financial agreement upon the rights she had – Where a provision in s 90G was not complied with and where the financial agreement was found not to be binding– Where the husband made an application for an order under s 90G(1B), which application was dismissed – Where the wife sought that the financial agreement be set aside - Where the wife alleged the husband exercised undue influence over her – Where it is found that the relationship between the husband and wife was one where the husband had influence over the wife, and that the husband had exercised undue influence – Where the wife alleged that, in respect of the making of the financial agreement, the husband had engaged in conduct that was, in all the circumstances, unconscionable – Where it is found that at the time the wife entered into the agreement she suffered from a special disadvantage when dealing with the husband – Where it is found the husband knew of the special disadvantage and took advantage of that by insisting upon the making of the agreement – Order that the agreement be set aside |
| Family Law Act 1975 (Cth) Matrimonial Causes Act 1959 (Cth) |
| Hoult& Hoult (2011) FLC 93-489 Weldon and Asher (2014) FLC 93-579 |
| APPLICANT: | Ms Raleigh |
| RESPONDENT: | Mr Raleigh |
| FILE NUMBER: | SYC | 2533 | of | 2013 |
| DATE DELIVERED: | 30 July 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 23 October 2014; 17 - 18 November 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Wheelhouse, SC |
| SOLICITOR FOR THE APPLICANT: | Attunes Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Lethbridge, SC Ms Clifford |
| SOLICITOR FOR THE RESPONDENT: | Haydon Fowler Corbett Jessop |
Orders
I declare that the financial agreement entered into between the parties on 21 October 2003, is not binding.
The husband’s application for an order under s 90G(1B) of the Act is dismissed
The financial agreement entered into between the parties on 21 October 2003, be set aside.
Any competing applications for property settlement be listed for procedural directions before a Registrar on a date to be fixed by the Registrar.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Raleigh & Raleigh has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2533 of 2013
| Ms Raleigh |
Applicant
And
| Mr Raleigh |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
In October 2003, eight days before Ms Raleigh (“the wife”) gave birth to the first child of the marriage she conferred with a solicitor for less than 15 minutes and signed an agreement that had been prepared by Mr Raleigh (“the husband”)’s then solicitors. The husband signed a counterpart agreement on the 21 October 2003. There is no issue between the parties that what was signed was a financial agreement as defined in s 90C Family Law Act 1975 (Cth) (“the Act”). There is no issue raised by the wife that the husband and the husband’s then solicitors have not complied with all the mandatory requirements that they were required to undertake to render the agreement binding. The husband seeks to rely upon this financial agreement (“the 2003 financial agreement”) to exclude the wife from making any application under s 79 of the Act.
The certificates annexed to the 2003 financial agreement indicate that advice was given on non-existent rights. The issue arises as to whether the requisite advice was given to either party. An, acknowledgment in Clause 14 of the 2003 financial agreement, signed by each party and witnessed by each of the parties’ then solicitor, says the requisite advice was obtained.
The wife says that the forensic onus is on the husband to prove that she was provided with the requisite advice. The husband says the acknowledgment in the 2003 financial agreement shifts the onus to the wife.
The wife submits that a finding should be made that she was not provided with the requisite advice pursuant to s 90G(1)(b)(i)and(ii) of the Act, in the form required by the wording of the legislation applicable at the date the 2003 financial agreement was signed.
If a finding is made that the requirements of s 90G(1)(b) of the Act have not been satisfied, then the husband seeks a declaration pursuant to s 90G(1B) of the Act that the 2003 financial agreement is binding.
Whether or not the 2003 financial agreement is found to be binding, the wife seeks an order setting aside the 2003 financial agreement on the basis that:
6.1.The agreement is void, voidable, or unenforceable (s 90K(1)(b)) as a result of undue influence;
6.2.In respect of the making of the financial agreement the husband engaged in conduct that was, in all the circumstances, unconscionable (s 90K(1)(e));
6.3.Since the making of the agreement a material change has occurred in circumstances relating to the care, welfare, and development of the two children of the marriage and, as a result of the change, the children and the wife will suffer hardship if the court does not set the agreement aside (s 90K(1)(d));
6.4.The agreement was obtained by non-disclosure of material matters (s 90K(1)(a).
BACKGROUND
The husband was born in 1954. The wife was born in 1965.
Prior to the parties commencing to live together the husband owned a property in which he currently resides at Suburb E, and which was the former matrimonial home. The parties commenced living at that property in 2001.
In 2001 the parties had some conversation about entering into an agreement (“the 2001 draft financial agreement”). The husband had his then solicitor prepare a draft agreement and then the wife consulted a solicitor about the 2001 draft financial agreement. This agreement was not executed.
In February 2001 the parties travelled overseas for some months.
In early 2003 the wife fell pregnant with the first child of the parties.
In the middle of 2003 the husband and wife married.
In 2003 the husband engaged the services of a new solicitor to prepare the 2003 financial agreement.
On 15 October 2003 the wife made an appointment to attend a solicitor “to sign the 2003 financial agreement on Friday, 17 October 2003 at 11am”.
On 17 October 2003 the wife attended her appointment with that solicitor and signed the 2003 financial agreement.
On 22 October 2003 the husband signed the 2003 financial agreement.
I late 2003 the first child of the marriage was born.
In 2005 the second child of the marriage was born.
After the birth of the first child and until May 2012 the wife was the primary carer of the children.
In January 2007 the family relocated to Melbourne for the husband’s work and in September 2007 relocated back to Sydney for the husband’s work.
The wife moved into a downstairs bedroom in 2009 (but the parties did not separate under the one roof at that time). The wife moved out of the matrimonial home on 26 January 2013.
RELEVANT TERMS OF THE 2003 FINANCIAL AGREEMENT
I set out below some of the important parts of the relevant recitals and covenants in the 2003 financial agreement:
G. [The husband] and [the wife] acknowledge that they: -
...
(ii) are fully aware of their respective rights;
…
N. For the purposes of this Agreement:-
…
(d) [The husband] and [the wife] seek to the fullest extent capable by law: -
…
(ii) To provide for a settlement of all property and other rights save for spouse maintenance that may arise from the marriage.
…
(g) [The husband] and [the wife] want: -
…
(ii) to enter into a Financial Agreement under Section 90C of the Family Law Act setting out:-
…
(1) if they separate, how their property and financial resources at the date of this Agreement or at a later time, and before the dissolution of the marriage is to be dealt with;
(2) the maintenance rights of either of them if they separate.
(h) [The husband] and [the wife] each have their separate property. In consequences of their marriage, they want to provide that they shall each retain full and complete control and right of their separate property and appreciation in their values and the amounts obtained by the sale of the properties without interference or claims by the other.
(Clauses 2 and 3 set out individual assets which comprise the husband’s “separate property” and the wife’s “property”. One of the assets listed for the husband is “2(h) A loan to [the wife] in the approximate sum of $38,000.00”. The liability listed for the wife is “3(d) Indebtedness to [the husband] in the sum of $38,000.00”)
4. [The husband] and [the wife] each waive, relinquish and release all right title and interest in and to any and all of the other’s separate property as set out in clauses 2 and 3 hereof and amounts obtained by the sale of the property.
5. [The husband] and [The wife] each waive, relinquish and release all right title and interest in and to any of the other’s separate property at (sic) set out in clauses 2 and 3 hereof and amounts obtained by the sale of the property.
6. [The husband] and [the wife] agree that any clothing, jewellery and personal effects purchased by either of them and given to the other for their sole use shall, in the absence of any evidence to the contrary, be deemed to be a gift.
7. The fact that [the husband] and [the wife] may hereafter acquire any assets of any nature whatsoever in joint names or as joint tenants or as tenants in common, shall not for the purpose of this Agreement, be taken or construed as expressly or impliedly varying altering or aggregating in any way the other terms of this Agreement. Any asset acquired in joint names shall be deemed to be earned by them in accordance with their respective contributions thereto.
…
11. [the husband] and [the wife] further severally acknowledge and declare that: -
…
(ii) All property and financial resources now standing in the name of [the husband] or in which he has an equitable interest belongs solely to him without any rights or claims therein being available to [the wife] either at law or equity;
(iii) All property and financial resources now standing in the name of [the wife] or in which she has an equitable interest belongs solely to her without any rights or claims therein being available to [the husband] either at law or equity.
14. [the husband] and [the wife] both acknowledge that they have obtained their own independent legal advice before executing this Agreement, including, but not limited to, the following matters:-
(i) The effect of this Agreement on their respective rights to apply for Orders under any relevant jurisdiction;
(ii) Whether or not it is to their individual advantages, financial or otherwise, to enter into this Agreement;
(iii) Whether or not it is prudent for each of them to enter into this Agreement;
(iv) Whether or not, and in the light of the circumstances which are reasonably foreseeable, the provisions of this Agreement are reasonable.
15. [the husband] and [the wife] intent this Agreement to be binding and if a child or children is born to them, or is accepted into their household, [the husband] and [the wife] will make separate arrangements for child support both during and, if necessary, after their separation.
16. Except as is otherwise provided in this Agreement, [the husband] and [the wife] forever waive and release to the other all property and testamentary rights and claims that they may have otherwise had upon marriage under present or future law in this or any other State or country to or in or against the separate property of the other.
17. If [the husband] and [the wife] separate the terms and provisions of this Agreement shall be in full settlement, satisfaction and discharge of any and all obligations that may arise from the marriage of the relationship otherwise set out herein. [The husband] and [the wife] each covenant and agree with the other to accept the terms and provisions of this Agreement in full and final settlement, satisfaction and discharge of any obligations that may arise from the marriage and in lieu of any other rights, claims or causes of action that they may have against the other except for this Agreement.
The text of the certificates signed by the parties’ then solicitors are in the following form:
CERTIFICATE FOR THE PURPOSES OF SECTION 90C
I, [name of solicitor and name of firm and address of solicitor], Solicitor, hereby certify that, in relation to an agreement in writing proposed to be entered into between [the husband] and [the wife] (hereinafter called “the parties”), I advised [wife] (hereinafter called “my client”), independently of the other party and before the time at which my client signed the agreement, as to the following matters:-
(v) the effect of the agreement on the rights of the parties to apply for an order under Part 90C of the Family Law Act 1975;
(vi) whether or not, at that time, it was to the advantage, financially or otherwise, of my client to enter into the agreement;
(vii) whether or not, at that time, it was prudent for my client to enter into the agreement;
(viii) whether or not, at that time, and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreements were fair and reasonable.
Dated this 17th day of October 2003 (for the wife) and 22nd day of October 2003 (for the husband)
…………………
[Solicitor]
THE LEGISLATIVE REQUIREMENTS FOR THE 2003 FINANCIAL AGREEMENT TO BE BINDING
The 2009 amendments[1] commenced on 4 January 2010 and retrospectively changed the requirements of s 90G(1) of the Act which applied to the 2003 financial agreement in this case.
[1] See Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 (No. 122, 2009) – SCHEDULE 5, Item 2; Item 8(4) and (6)
It was agreed between the parties that the effect of the 2009 amendments was that, given the 2003 financial agreement was entered into in 2003, s 90G(1) of the Act is to be read to impose the following requirements:
A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about:
(i)the effect of the agreement on the rights of that party; and
(ii)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; and
(iii)whether or not, at that time, it was prudent for that party to make the agreement; and
(iv)whether or not, at that time and in light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable…
(c) omitted
(d)the agreement has not been terminated and has not been set aside by a court
See Wallace & Stelzer (2013) FLC 93-566.
The 2009 amendments eliminated the formal requirement for the annexure to a financial agreement of a certificate signed by a solicitor providing independent legal advice, setting out that the advice that had been given.
WAS THE REQUISITE ADVICE GIVEN IN RESPECT OF THE 2003 FINANCIAL AGREEMENT?
There is no issue raised about whether or not the husband was given the requisite advice, notwithstanding the error in the certificate provided by the husband’s solicitor.
The wife does not dispute that there was compliance with s 90G(1)(iii) and (iv) of the Act. She was advised that it was not prudent for her to make the agreement in light of circumstances that were reasonably foreseeable (namely the imminent birth of their first child) and that the provisions of the agreement were not fair and reasonable.
The questions to be determined are whether the wife was given advice about:
29.1.The effect of the agreement on her rights (the first question); and
29.2.Whether or not, at the time the advice was provided, it was to the advantage, financially or otherwise, of the wife to make the agreement (the second question).
The forensic onus
The onus of proof of establishing that the wife received the requisite advice is on the husband because he seeks to establish that the financial agreement is binding (Hoult & Hoult (2013) FLC 93-546 at [60]-[62] and [261]).
It then falls to the husband to establish that the wife received the requisite advice in accordance with s 90G(1)(b) of the Act.
Thackray J says at [62] in Hoult:
Importantly, however, I consider that once the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate (especially when read with the recital in the agreement to the same effect).
Strickland and Ainslie-Wallace JJ say at [261]:
As Justice Thackray highlights in considering Ground 1, once the husband produced in evidence the certificate signed by the other party’s solicitor, there was a forensic obligation on the other party to adduce evidence which would disprove or at least throw into doubt the inference or conclusion to be drawn from the certificate, and particularly when read with the recital in the agreement to the same effect (paragraph 63 reasons for judgment). It is in that light that the evidence of the wife as to whether she was given the requisite advice or not needs to be addressed.
In Logan & Logan (2013) FLC 93-555 at [49] the Full Court uses the word “bolstered” in relation to part of the agreement that bolstered what was said in the certificate.
The question arises as to whether or not there has been a shift in the forensic onus of proof and whether there is a different answer in respect of each of the questions to be determined. In relation to the second question, both the certificate and the agreement assert that the wife was advised as to whether or not, at the time, it was to her advantage, financially or otherwise, to enter into the agreement. There can be no doubt that the forensic onus has shifted to the wife in relation to the second question.
In relation to the first question, the husband concedes that the wife’s solicitors’ certificate contains an error.
The wife’s solicitor’s certificate says that he advised the wife independently of the husband before the time at which the wife signed the 2003 financial agreement as to the following matters:
The effect of the agreement on the rights of the parties to apply for an order under Part 90C of the Family Law Act 1975.
That is, on its face, the certificate indicates that the wife was given advice about her right to apply for an order under a “Part” of the Act that does not provide the power to make any order. The obvious error in the certificate is not the subject of any application for rectification and even if it was, that remedy is likely not available, (see Murphy and Strickland JJ in Senior & Anderson (2011) FLC 93-470, with May J dissenting). Although the error in the certificate is no longer fatal to the husband relying on the 2003 financial agreement to exclude the jurisdiction, that error means that the husband cannot point to the certificate as evidence that the wife received advice as to the effect of the 2003 financial agreement on the rights that she had to apply for an order under Part VIII of the Act. More than that, it is powerful evidence that the requisite advice was in fact not given because the solicitor has certified that he advised the wife of the effect of the 2003 financial agreement on non-existent rights.
Notwithstanding the problem with what the solicitor has certified, senior counsel for the husband argues that the forensic onus has shifted to the wife in respect of the first question. Firstly, senior counsel for the husband relies upon clause 14(i) of the 2003 financial agreement where the wife acknowledged that she had obtained her own independent legal advice before executing the agreement, including but not limited to the following matters:
(i)The effect of this Agreement on the respective rights to apply for Orders under any relevant jurisdiction.
(ii)Whether or not it is to their individual advantages, financial or otherwise, to enter into the Agreement.
Secondly, senior counsel for the husband relies upon the following statement by the Full Court in Wallace and Stelzer at [101]:
The person who seeks to establish that a financial agreement is binding carries the onus of proof (Hoult & Hoult (2013) FLC 93-546). Applied to the facts in this case, this means that it fell to the wife to establish that the parties received legal advice in accordance with s 90G(1)(b). As a consequence of recital W and by tendering the signed agreement and the certificates, prima facie the wife was able to discharge her legal onus.
[emphasis added]
Senior counsel for the husband argued that the use of the conjunction “and” in [101] of Wallace and Stelzer meant that as long as either the certificate or a recital or an acknowledgment in an agreement evidenced that the requisite advice had been given, then there was a shift in the forensic onus of proof in relation to the first question from the husband to the wife.
I do not accept that the question can be answered that simplistically. It is necessary to consider the weight to be placed upon the conflicting statements. The certificate by the solicitor is made by a legally qualified person who has specialised knowledge and is giving the advice. The acknowledgment in clause 14(i) of the 2003 financial agreement by the wife is an expression of lay opinion, and is for all intent and purposes the same wording as recital W in the agreement which was under consideration in Wallace & Stelzer. At [109] and [110] of Wallace & Stelzer, the Full Court said:
109. It was however submitted by the husband that when his Honour took into account that the husband signed recital W, he erred. This challenge is made on the basis that recital W is no more than an admission by a lay person about matters of mixed fact and law. It follows, that such an admission could not provide the basis for a finding by the court (Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317).
110. The words used in recital W do not require the application of a standard fixed by law in order to gain meaning. In our view, they constitute an admission as to a matter of fact, the fact being the provision of legal advice in the manner and of the type described. It follows that the words used in recital W constituted admissible evidence against the husband (and the wife) of the truth of the matters there stated.
The Full Court have said that an acknowledgment similar to the one given by the wife in this case, is not inadmissible as lay opinion about matters of mixed fact and law as it is an opinion about only fact. I am bound by that view. But the question still remains as to what weight that acknowledgment is given in circumstances where the certification by the person with the specialist knowledge who gave the advice suggests that the advice given was something different. The evidence in the solicitor’s certificate carries more weight. I find that in relation to the first question, namely, whether advice was given about the effect of the 2003 financial agreement on the wife’s rights, the forensic onus does not shift from the husband to the wife and the husband continues to bear that onus of proof.
To what extent am I able to consider the content of the advice?
In Hoult & Hoult both the certificate and the agreement indicated that the requisite advice had been given and the forensic onus had shifted to the wife.
Thackray J said at [95] to [102] of Hoult & Hoult:
95. Ground 4 complains about the failure of the trial Judge to give weight, or at least proper weight, to the “contemporary” certificate of legal advice given to the wife.
96. I accept there is merit in the criticism of the trial Judge’s treatment of the certificate. In particular, I am unable to accept the view his Honour expressed at [88] that “the certificate is, without more, insufficient to satisfy the onus of establishing that the relevant s 90G requirements have been met”. The certificate, when read with Recital N, should have been treated as prima facie evidence of compliance with the legal advice component of s 90G(1).
97. Put another way, employing Windeyer J’s formulation in Purkess v Crittenden (supra at 171), the production of the certificate, read together with the recital, should have given rise to “an inference, a presumption of fact or a presumptio hominis” that the requisite advice had been given. The question that then should have been posed was whether the wife had adduced evidence, or elicited evidence in cross-examination, that was “sufficiently precise and definite to displace the inference” (to again quote Windeyer J at 171). The evidence required for this purpose was such as would raise “suspicions which counter-balance the presumptions”. See ‘Presumptions and Burdens’ by A.T. Denning, as he then was, in (1945) 61 Law Quarterly Review 379, adopted in Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 at 425-426.
98. In dealing with this ground, I also respectfully disagree with the view expressed by the trial Judge, at [74], that s 90G “requires reliable evidence as to that which is said to have been the advice given which meets the criteria”. His Honour adopted this view because he was of the opinion, expressed at [79], that a mere statement that the prescribed advice had been given “swears to a conclusion rather than the facts upon which the Court might base its own conclusions”. However, in my view, this fails to recognise that the production of the certificate (especially when read with the recital) had caused the evidentiary burden to pass to the wife. The inference properly to be drawn from the certificate (read with the recital) is that the advice required by s 90G had been given, even though there was no evidence of the content of that advice.
99. As I have already said, in order for the burden to pass back to the husband, the wife had to adduce sufficient evidence to displace the inference or at least to place the matter into doubt. In determining the sufficiency of the evidence for this purpose, the trial Judge was required to assess the credibility of the only two witnesses who were privy to the transaction – the wife and her solicitor. It is clear he preferred the evidence of the wife on this issue, and had his Honour posed the correct question, that preference arguably would have been sufficient to discharge the evidentiary burden that had passed to the wife.
100. However, the trial Judge did not pose the correct question. He set out to ascertain the content of the legal advice, whereas he needed only to be satisfied that the advice referred to in s 90G(1)(b) had been given. Thus, when his Honour found that the certificate provided “an insufficient evidentiary foundation”, it seems his Honour was requiring the husband to provide a foundation for something that did not have to be proved.
101. The certificate, read with the recital, provided a sufficient evidentiary foundation for finding there had been compliance with the requirements of the Act. The question whether that foundation had been undermined by other evidence became confused with the question of the precise content of the advice. It is possible, if the questions had not been confused, that the answer would have been the same, but it would be unsafe to make that assumption.
102. For these reasons, I consider ground 4 has been made out.
[emphasis added]
Strickland and Ainslie-Wallace JJ said at [279] of Hoult & Hoult:
It also must not be forgotten that, as Justice Thackray has correctly pointed out in paragraph 100 above, it was only necessary for the trial judge to be satisfied that the advice referred to in s 90G(1)(b) had been given, and the certificate can be a sufficient evidentiary foundation for that finding; it was unnecessary for the trial judge to ascertain the “content of the legal advice”, and that was the error his Honour made.
In Logan & Logan the Full Court said at [50], [51] and [55]:
50. Applying the principles emanating from Hoult, what the reliance by the husband on the certificate, and the recitals, does is satisfy the initial onus on the husband, and passes the evidentiary burden to the wife. The certificate gave rise to “an inference, a presumption of fact or a presumptio hominis” (paragraph 97) that the requisite advice has been. The question then becomes whether the wife has adduced sufficient evidence to displace that inference.
51. As was explained in Hoult in paragraphs 101 and 279, that does not then require an inquiry into the content of the legal advice, but just as to whether the advice was given.
....
55. Thus, the question becomes whether this evidence satisfies the forensic obligation thrown on the wife by the presentation of the certificate. In answering that question it must be remembered that the obligation was not to prove that the advice had not been given, but to throw the matter into doubt, leaving the onus of satisfying the court that the advice had been given on the husband.
In Wallace & Stelzer the Full Court at [103] said:
Although there appeared to be some suggestion in the husband’s case before us that in a case such as the present the court is required to consider the accuracy of the legal advice provided, we did not understand that issue to be ultimately pressed. But in any event we note that in the recent Full Court decision of Logan & Logan [2013] FamCAFC 151, and relying on Hoult, it was held that the only enquiry necessary is as to whether advice was given, and not as to the content of that advice.
The statements made in these three cases are all in circumstances where the forensic onus was with the party receiving the advice. The statements made about not considering “the content of the legal advice” or “the precise content of the advice” are made in that context. In this case, however, I embark upon a consideration of the evidence about whether or not the advice about the effect of the 2003 financial agreement on the wife’s rights was in fact given, bearing in mind that the onus is on the husband to establish that it was. It is difficult for me to see how the husband can discharge that onus if I am unable to explore the evidence about what advice was given. To explore what advice was given, I need to have some regard to the context in which the advice was given and its content. The parties in this case did not argue otherwise.
The advice given under s 90G(1)(b)(i) of the Act
On 14 October 2003 there was a telephone call made to the wife’s solicitors in respect of an enquiry to act for the wife and give advice to the wife on the 2003 financial agreement. There is no written record by the wife’s then solicitor verifying he received this call.
On 15 October 2003 the wife’s solicitors received a facsimile transmission sent from the home of the parties enclosing a copy of the 2003 financial agreement and asking that a suitable date and time be arranged for an appointment to discuss that agreement.
On 15 October 2003 there was a telephone call between the office of the wife’s solicitors and the office of the husband’s solicitors. Also on that day there was telephone communication from the solicitors for the wife to the wife to arrange for her to see her solicitor at 11.00 am on Friday 17 October 2003.
On 15 October 2003 the wife’s solicitors sent out a fee agreement to the wife. An employee at the wife’s solicitor’s office informed the wife in the conversation with her on 15 October 2003 that she should bring the retainer agreement with her to the appointment with her solicitor. There is no evidence that the retainer agreement was every signed or sent back to the wife’s solicitor. The husband retained a copy of it. There is no evidence that the wife paid her solicitors’ fees and I infer the husband paid the retainer of $500, although (unlike the retainer he paid for her previous solicitors in 2001) he has not provided any evidence that he did that.
The wife met with her solicitor on the morning of 17 October 2003.
The contemporaneous note of advice given to the wife and a letter from the wife’s solicitor to the wife dated 20 October 2003 are the best evidence of the advice which was given.
Because of its importance, I set out in full the file note made by the wife’s solicitor, which he dictated, at the conclusion of his conference with the wife:
FILE NOTE
MATTER: 300123 17 October 2003
RE: BINDING FINANCIAL AGREEMENT – [THE WIFE’S NAME]
SUBJECT: CONFERENCE WITH CLIENT
_______________________________________________________
Time - 11:00a.m.
Conference with [the wife]. She has read through and understands the Binding Financial Agreement.
Operation of Section 90C of the Family Law Act
Explained the effect of this section and the binding nature of the Financial Agreement she was about to enter into. If she separated from her husband or he separates from her, she will not be able to make any claim in relation to the property listed as “separate property” under the Agreement. He would not be able to make a claim against her separate property but this is substantially less than his own. In my view, the Binding Financial Agreement is not fair to her particularly having regard to the fact that she is expecting a child. I did not recommend it. She understands this but wants to proceed with it anyway.
Circumstances following death
Advised her to consider what was to happen in the event of the death of her husband. She needs to ensure that a Will is in place to protect herself and her child. If they don’t have updated wills to that purpose they should do so immediately. She will discuss this with her husband.
Certification
I witnessed her signature to the Deed after providing the above explanations and then signed the Certificate of Independent Advice. I told her that I would send this Agreement back to [the husband’s solicitor] and that the Agreement would be binding as soon as it had been signed and dated by her husband.
Time including notes = 15 minutes.
[name of wife’s solicitor]
On 20 October 2003 the wife’s solicitor wrote an advice upon the financial agreement in the following terms:
Our Ref: [reference number] 20 October 2003
[The wife’s name]
[The wife’s address]
Dear [the wife],
RE: ADVICE UPON BINDING FINANCIAL AGREEMENT
We refer to our conference on 17 October 2003 during which we explained to you the effect of the Binding Financial Agreement which you have now signed.
We confirm our advice that the Agreement is not reasonable from your point of view and does not provide for your rights in the event of a separation. Notwithstanding this advice you have proceeded with the Agreement.
We have also advised you to consider the testamentary arrangements that exist between yourself and your husband, particularly in view of the approaching birth of your child. Please discuss the necessary estate planning with [the husband]. If you need us to assist you to prepare a Will please feel free to contact us. Whether you us this or another firm the main thing is to ensure that you are properly protected in the event of the death of your husband. We have not been requested to prepare any testamentary documents or to advise further in relation to estate planning.
Thank you for your instructions.
Yours faithfully,
[The wife’s solicitors]
[Signature, name and email of wife’s solicitor]
I infer that the wife’s solicitor had read the agreement prior to meeting with the wife. The conference on 17 October 2003 between the wife and her solicitor lasted less than 15 minutes. The file not indicated that the 15 minutes included time for the solicitor to:
· Give advice in relation to wills and testamentary dispositions;
· Execute the agreement and certificate;
· Dictate the file note.
The time to give any requisite advice was therefore significantly less than 15 minutes.
The wife’s 2003 solicitor gave oral evidence in the hearing, during which he made a frank concession that he had no recollection about what was said during the conference with the wife on 17 October 2003, which was independent of the contemporaneously created file note and the letter written three days later. I accept the conference with the wife was 11 years ago and several thousand conferences later. For that reason, I place little weight on any evidence the solicitor gave about what his practice might have been in 2003 or that he told the wife that the effect of the agreement was that it prevented her from getting a meaningful property settlement or any property settlement.
The wife’s memory about what happened on 17 October 2003 is vague. The wife knew she was seeing the solicitor so she could be independently advised about the terms of the 2003 financial agreement and advised about her rights if she and the husband separated and there were ultimately court proceedings. The wife however has little memory as to what advice was given. She says she went into a courtyard and sat on a bench with a table in the middle of the benches. I note that at page 22 of Exhibit 1 there is a client information sheet that was completed on 17 October 2003 (probably by the wife), but certainly upon information she provided. The wife’s then solicitor gave evidence that he sometimes meets and greets clients in the courtyard. Whilst this was not the matter of any testing orally, there is some possibility that the wife saw another person and was given the client information sheet to fill out prior to seeing her solicitor and that she did that in the courtyard. There is no indication that she completed that document in her solicitor’s presence and it is likely it was completed before she went to the solicitor’s office. I find that the wife’s recollection that her conference with her solicitor was in the courtyard is an unreliable memory.
The wife says the first thing the solicitor said to her when they sat down was “I didn’t realise you were pregnant. This could change the agreement. When are you due?”. She told him “any minute” and says that he told her there was nothing in the agreement that covered children. He then told her he had read the agreement and proceeded to go through “some” of the agreement and read parts of it to the wife. The wife recalls the process was rushed and did not take very long, she says from her memory it lasted less than 20 minutes. I find that it was actually less than 15 minutes. She also says that she cannot recall the solicitor telling her what each of the clauses meant and did not recall the solicitor saying anything to her about anything in the agreement if the husband passed away. The wife signed the 2003 financial agreement but was not given a copy of it. She recalls the solicitor saying to her at the end of the consultation “I’ll have these signed off and will mail them to [the husband’s] solicitor”. In oral evidence the wife said that her solicitor “went through [the 2003 financial agreement] thoroughly” and asked her if she was sure she wanted to sign it. In response to the next question though, the wife herself questioned how anyone could go through such a long document in 15 minutes “thoroughly”.
In Hoult there was no file note of the consultation and the plurality (with whom Thackray J disagreed on as to this point) at [267] said the following:
..... We do not accept that the absence of documentation is logically or necessarily “consistent” with a failure to give the required advice. The fact that it may be prudent practice to make a file note of having given the advice cannot be translated to either a finding that the advice was not given or even that it was consistent with the advice not being given, particularly when all of the evidence of the solicitor is taken into account, and the force of the certificate and the recitals in the agreement is recognised.
In this case, there is no “force of the certificate” and there is a file note contemporaneously dictated at the end of the conference. The fact that nothing is said about essential matters in that file note is of some relevance.
Senior counsel for the wife put considerable emphasis during final submissions on the fact that the conference between the wife and the solicitor was noted by the solicitor as lasting 15 minutes. As I have already discussed, in that time the solicitor dictated the file note and spent time speaking with the wife about matters which were not relevant to the giving of the requisite advice. I was in effect invited to infer that there was insufficient time to give the requisite advice.
In Hoult, the length of the consultation was 50 minutes. The plurality (with whom Thackray J again disagreed on this point) at [268] said:
.... the trial judge was in error in finding that the wife’s evidence about the absence of legal advice was “consistent” with the evidence concerning the length of the consultation. We consider that it is impermissible speculation to link the question of whether the required advice was given to the time of the consultation, again, particularly when all of the evidence of the solicitor is taken into account and the force of the certificate and the recitals in the agreement is recognised.
As I have previously commented, there is in this case no “force in the certificate”. Notwithstanding the warning about impermissible speculation, the length of the consultation in this case is such that, given that I have some evidence about what was done in the conference, the time taken in the consultation is consistent with findings that are otherwise available on the evidence about what was not done.
The wife’s solicitor’s certificate says the wife was advised as to the effect of the agreement upon the rights of the wife to apply for an order under Part 90C of the Act.
The solicitor’s contemporaneous file note records that the solicitor:
68.1.Explained the effect of s 90C of the Family Law Act;
68.2.Explained the “binding nature” of the financial agreement;
68.3.Explained the effect of clauses 2,3 and 4 of the agreement;
68.4.Gave the wife advice about what needed to be done to protect her in the event of the husband’s untimely death, particularly advising her to encourage her husband to make a will.
68.5.Advised the wife that the agreement was not fair to her, particularly as she was expecting a child.
The letter of 20 October 2003 records that:
69.1.An explanation had been given as to the effect of the “Binding Financial Agreement” [taken with the oral evidence of the wife, I find this means the solicitor went through particular clauses of the agreement with the wife];
69.2.The wife was told the agreement was not reasonable;
69.3.The wife was told the agreement did not provide for her rights in the event of a separation;
69.4.Reiterated the wife should consider testamentary arrangements between herself and her husband.
The question arises as to whether this, all taken together, is sufficient for the husband to establish that the wife has received advice about the effect of the agreement on the wife’s rights. I conclude it does not.
The evidence does not establish that the wife’s solicitor:
71.1.Took any financial history from the wife;
71.2.Discussed with the wife what rights she actually had under Part VIII of the Act, and in particular s 79 of the Act and how a court might approach a case after the parties had children, having regard to all the mandatory considerations in s 79(4) (and particularly s 79(4)(d)-(g) of the Act).
The husband bears the forensic onus of establishing that the wife was provided independent legal advice about the effect of the 2003 financial agreement on her rights. Although the solicitor told the wife the agreement did not make provision for her rights, I am not satisfied the wife’s solicitor put himself in a position to know what those rights might be, or that the solicitor told the wife what those rights might be. The husband is unable to discharge the onus of establishing that the wife’s solicitor provided independent legal advice about the effect of the agreement on the wife’s rights.
Consequently the husband has failed to establish that the provisions of s 90G(1)(b)(i) of the Act have been satisfied and accordingly the husband has not established that the financial agreement is binding.
The advice given under s 90G(1)(b)(ii) of the Act
In relation to the second argument in respect of the wife relying upon s 90G(1)(b)(ii) of the Act, as indicated above, the wife bears the forensic onus of establishing that she was not advised, whether or not at that time, it was to her advantage, financially or otherwise, to make the agreement. She has failed to do so. It is sufficiently clear that the solicitor told the wife that it was not to her advantage to make the agreement. There was no argument before me as to the meaning of the words “financially or otherwise”. It is arguable that the word “financially” refers to financial advice. There is no evidence that the solicitor gave the wife any financial advice. That may be another basis upon which the agreement could be held not be binding but I make no determination in relation to that issue given it was not argued. Apart from that issue, I am satisfied that the provisions of s 90G(1)(b)(ii) of the Act have been complied with.
THE HISTORY BETWEEN THE PARTIES AND THE FACTS AND CIRCUMSTANCES RELEVANT TO THE MAKING OF THE 2003 FINANCIAL AGREEMENT
The husband makes an application under s 90G(1B) of the Act to have the 2003 financial agreement declared binding. The wife makes an application that the 2003 financial agreement be set aside under various grounds in s 90K(1) of the Act. The history between the parties and the facts and circumstances relevant to the making of the 2003 financial agreement are relevant to these applications. Given that part of the history between the parties is controversial, I now discuss the credit of the parties.
The wife’s credit
The wife is an intelligent woman who speaks English reasonably well. The wife was working in a bank as a service consultant when she met the husband. She later commenced work as a mobile mortgage lender manager. In that capacity the wife offered loans to potential customers at the bank and it was necessary for the wife to explain bank documents to clients such as terms of loans.
Overall the wife attempted to answer questions in a straightforward manner. She indicated on quite a number of occasions, that she could not remember whether or not a specific thing that was put to her had happened or had not happened.
The wife was cross examined about whether or not she still held the view, expressed in an earlier affidavit, that it was not her 2003 solicitor who gave her the advice on the 2003 financial agreement and signed the certificate of advice. The wife now does not dispute that the objective evidence establishes that it was her solicitor who had the conference with her. The wife’s memory however is still that it was another solicitor in the wife’s solicitors’ office with whom she had the conference. This confusion in the wife’s mind does highlight a lack of awareness as to precisely what was happening at the time she was signing the 2003 financial agreement. As already mentioned, the wife also thought the agreement was signed in the courtyard of the business premises of the wife’s solicitors. I have found the wife’s solicitor saw the wife in his office.
The wife had recollections that did not prove to be accurate when her memory was refreshed by seeing various documents, but nothing of great consequence turns on those parts of the evidence that she has obviously misremembered. On essential matters, the wife was strong and consistent in the version that she gave and I accept her as an honest witness whose memory about key events was reasonably reliable.
The husband’s credit
Most of the time the husband appeared to answer questions asked in a direct and responsive manner. There were, however, parts of the husband’s evidence which I did not accept.
As discussed below, the husband was coy about his second conversation on 21 October 2003 with an employee of the wife’s solicitor’s with respect to picking up the 2003 financial agreement signed by the wife.
The husband was inconsistent in his version as to what he knew about the expected date of B’s birth. B was in fact born in 2003. The husband’s evidence was that B was “late” but when I asked him during oral evidence what the expected due date was he was not able to tell me. The husband did not agree during oral evidence that the wife was due to give birth within a month (from the time he received the final draft 2003 financial agreement), but said it was a “bit more than a month”. The husband also said in response to a question about whether he should have indicated to his solicitors that the wife was pregnant, that the fact of the matter was at that time the parties did not have any children. However he said he was “pretty sure” that he had told his solicitor. The husband then said that when the process for the drafting of the 2003 financial agreement was originally started it was a “long time before giving birth”.
Senior counsel for the wife asked me to infer from the way the 2003 financial agreement was drafted, particularly the words “if there are children”, not to accept the husband’s version as being truthful. It would be unsafe for me to do so on the basis suggested. The agreement was drafted on the basis that no children had yet been born and that was still the case (just) at the date of the signing of the agreement.
The husband resiled from the evidence he gave at [55] of his affidavit that the wife provided him with a copy of the fee agreement from her solicitor “at or about the time” that she received that document. The document was sent in the post by her solicitor on 15 October 2003. This would have meant that the husband would have had the wife’s fee agreement in his possession on or about the time the wife met with her solicitor. When pressed, the husband said that in fact he may not have had a copy of the wife’s fee agreement until after the birth of the child. The fee agreement makes clear that the wife’s solicitor was taking on the job of work on the basis that he was restricted in not being able to alter or negotiate any term on the agreement. The husband’s initial evidence would have him knowing that prior to the execution of the 2003 financial agreement. The husband started to use the expression “later on” rather than “on or about” when referring to the time when he received the wife’s fee agreement. I find that this change in the husband’s evidence was him altering his evidence in cross examination so that his position might be seen in a more favourable light.
The husband asserted that he himself drafted clauses 11.2 and 11.3 of the 2001 draft financial agreement” (which is discussed below). I find that that recollection is not based in fact and that the husband’s solicitor at the time drafted those clauses (albeit on the husband’s instructions).
Conclusion as to credit
The parties are attempting to remember what they did over 10 years ago. Neither parties’ memory is particular reliable. The comment made by Thackray J in Weldon and Asher (2014) FLC 93-579, another case involving a financial agreement, is apt in this case:
[49] It is not necessarily the case that neither party deliberately gave false evidence, although at least one of them must be mistaken about various matters they now claim to remember. As Lady Hale said in In the Matter of LC (Children) [2014] UKSC 1 at [67]:
Almost every witness ... engages in a certain amount of (conscious or unconscious) manipulation of their recollection of past events to meet their present interests.
As I set out below, there are parts of the wife’s evidence where I prefer the husband’s version over that of the wife and there are parts of the husband’s evidence where I prefer the wife’s version over that of the husband.
The 2001 draft financial agreement
As indicated above, in 2001 the husband had prepared a draft financial agreement. Although the circumstances relating to the preparation of that agreement occupied considerable time in the hearing, the 2001 draft financial agreement does not have particular relevance to issues that I am required to decide, at this point in the reasons. The fact that it was never executed is of some relevance. Also, when later addressing the wife’s s 90K application, the 2001 draft agreement stands in contrast with two particular matters in the 2003 agreement.
The husband says that the parties commenced to talk about a “prenuptial agreement” in or about November 2000.
On 1 February 2001 the husband received a client services agreement from the solicitor whom he had engaged to prepare the 2001 draft financial agreement. The husband gave the solicitor instructions that the 2001 draft financial agreement should be prepared within a strict time frame, prior to his departure with the wife overseas on the weekend after 6 February 2011. On 6 February 2001 the husband’s solicitors sent the husband a draft copy of the agreement. Clause 11 of that agreement attempted to deal with the issue of adjustment of property if a child (or children) was born to the parties. Clause 11.1 of this first draft provided that both parties would arrange to financially support the child to the best of their respective abilities. Clauses 11.2 and 11.3 provided that the party who had caring responsibility, if they were in an inferior financial position, would receive from the other an amount of $300,000 if there was one child, and $350,000 if there were two or more children. In her letter of 6 February 2001 the husband’s solicitor made it clear that she was concerned about clause 11 of the agreement and that a court might set the agreement aside if these provisions were not made watertight. The husband’s solicitor wanted to refer the matter to a barrister who was particularly experienced in these issues. The husband attempted to redraft clauses 11.2 and 11.3 by deleting them and replacing them with a new clause 11.2 (Annexure G to his affidavit). His proposed clause was:
11.2 The intention of this clause is to provide a dwelling for the party with children unless it is already available to then (sic) or unless it is available from other parties outside the agreement or unless the party does not have sufficient funds to provide it for themselves after the assets less liabilities are divided between the parties. If the amount to be divided (assets minus liabilities is less than $650,000, then the other party shall make up the additional amount needed to provide a three bedroom apartment in [Suburb E]. ([Name of husband’s solicitor], this is becoming too hard and I think we should probably leave it out)
Any attempt to address the issue in any substantial way was left out of the third draft of the 2001 draft financial agreement, leaving only clause 11.1 which required both parties to emotionally and financially support any future children to the best of their respective abilities.
The husband had a falling out with his 2001 solicitor as a result of the clause in relation to future children and the recommendation to get counsel’s advice about this issue. The principal of the husband’s solicitor’s firm terminated the retainer with the husband to prepare the agreement and compromised his firm’s legal fees as part of the termination of the arrangement.
At some point the wife obtained advice in relation to the 2001 draft financial agreement. It is unclear as to when this took place. The husband paid the wife’s solicitors’ fees on 12 September 2001.
The 2001 draft financial agreement was not finalised or signed. The wife did not sign the 2001 draft agreement upon the advice of her then solicitor and she says the husband was angry that she did not sign the 2001 draft agreement.
I find that the husband prior to the parties leaving for their overseas trip in early 2001 was anxious to press the wife to sign a “prenuptial agreement”. At [21] of his affidavit the husband seeks to give the impression that the parties had agreed to marry in early 2001, but that the husband “was unable to arrange for our wedding to take place in early 2001, before we went overseas, because I could not arrange for all of my family members to come to the wedding at that time”. This is somewhat inconsistent with his evidence at [33] when the husband said he proposed marriage to the wife on 8 March 2003 at a well-known restaurant in Sydney. The reason that the husband was not able to get the wife to sign the 2001 draft financial agreement before the parties left for their trip overseas in 2001 was not because the pressure was off him because there was no longer to be a wedding at that time, but rather because he had a falling out with the solicitor.
In her first affidavit the wife asserted that the husband, at about the time the parties commenced cohabitation in 2001, showed her a draft financial agreement which had terms in it relating to the wife’s “not cheating on him”; “not leaving him for a younger man” and “something about [the wife’s] weight”. She went on to say “I am not sure of the wording but there were points made about my weight” (the wife’s affidavit sworn 4 September 2014 at [22]). The husband asserts that the wife was comfortable in making these assertions in light of annexure A to the wife’s affidavit which was a letter from the husband’s solicitors telling the wife’s solicitors that enquiries of former solicitors and searches to date by the husband had been unable to locate copies of the 2001 draft financial agreement. It is the husband’s evidence that he had not been initially able to locate any copies of the 2001 draft financial agreement, but by September 2014 he had found them (those documents having been in his possession at all times). It was the husband’s case that the wife had endeavoured to develop or embellish her case about the 2001 draft financial agreement in the belief that the husband did not have contemporaneous records available to him which might contradict what she said.
The three documents which are annexed to the husband’s affidavit, which are various iterations of the draft 2001 financial agreement (Annexure’s F, G and H to the husband’s affidavit sworn 30 September 2014), do not have any reference to the matters to which the wife referred (her weight, her potential cheating or leaving him for a younger man). It was submitted that this was corroborative of the wife fabricating these assertions. That is not a logical submission. The fact that three drafts of the document, which the husband belatedly produced, do not contain this information, does not mean that earlier instructions prepared by the husband did not. It appears that the solicitors for the husband in 2001 destroyed their file. There is no record of the husband’s initial instructions to them. The husband concedes that there were conversations between he and his wife about her weight from time to time (the husband saying generally that it was the wife who had a preoccupation with her appearance). The husband does however agree that during the marriage it was the wife’s view that he said to her that she was “fat”. It would be unsafe, simply because there was no reference in the known drafts of these issues, to find that the wife is fabricating this part of her evidence. Given my reservations about the credit of both parties, I cannot say whose memory is more reliable about this issue.
The 2003 financial agreement
What happened between the parties in 2003, leading to the signing of the 2003 financial agreement, is controversial and the evidence of each party contains inconsistencies. I set out what I find probably happened.
It is the husband’s evidence that the parties had had a conversation at a restaurant in early 2002 about the signing of another financial agreement. The wife does not remember this. At best it was a fleeting reference. The husband did nothing about having a new agreement drafted at that time.
Pursuant to s 90K(1)(e) of the Act I find that the 2003 financial agreement was entered into in circumstances where the husband engaged in conduct that was in all the circumstances unconscionable and I find that the financial agreement should be set aside on that basis.
Since the making of the 2003 financial agreement has a material change occurred in circumstances relating to the care, welfare, and development of the two children of the marriage and, as a result of the change, will the children and the wife suffer hardship if the court does not set the agreement aside (s 90K(1)(d))?
His Honour Le Poer Trench J discussed in Pascot & Pascot [2011] FamCA 945 the provisions of s 90K(d) of the Act and found the provision is similar to s 79A(1)(d) of the Act, excepting the change in circumstances need only be “material” under the provision as opposed to “exceptional” as in s 79A(1)(d). His Honour outlined the test to be adopted as follows:
354. For the purposes of sec 90K(1), it would be useful to adopt the test in the following terms:
a) There must be circumstances that have arisen since the making of the Binding Financial Agreement, being circumstances of a material nature relating to the care, welfare and development of a child of the marriage;
b) It must be demonstrated that the child or the applicant, if she has caring responsibility for the child, will suffer hardship if the court does not set the agreement aside;
....
355. In relation to the first element, it is clear that the court must substitute the broader standard of sec 90K(1)(d) for the narrower sec 79A(1)(d) and be satisfied that that a material change in circumstances has occurred, being circumstances relating to the care, welfare and development of a child of the marriage.
…
357. … The first element of the test would now be that the court must be satisfied that a substantial, significant and relevant change has occurred, being circumstances relating to the care, welfare and development of a child (of the marriage).
Ryan J agreed with Le Poer Trench J’s formulation in Saint Claire & Saint Claire [2013] FamCA 491 at [119].
There are two children of the marriage. At the time of signing the 2003 financial agreement the wife was heavily pregnant with the parties’ first child (and in fact gave birth only three days later). There are current interim orders for equal shared parental responsibility and for the children to spend time with the wife. The wife is seeking final orders for equal shared parental responsibility and equal shared care.
The wife is currently unemployed. The wife lives in rented accommodation and is on Centrelink benefits.
The 2003 financial agreement does not provide for child support and the husband does not pay any child support to the wife. The wife financially provides for the children when they are in her care.
The husband who is aged 61 years old has had no employment as a consultant since leaving his last employment in November 2011.
At [57] of this affidavit the husband states:
As previously stated by me in this Affidavit, [the wife] and I had discussed having 2 or 3 children and this was within our contemplation when the financial agreement was signed. The financial agreement includes a provision, at Clause 15, noting that [the wife] and I intended the agreement to be binding even if a child or children were born to us after the agreement was made.
The husband says that since he stopped working in November 2011 he has assumed the role of primary carer for the children. He further states that since February 2012 the wife stopped providing any regular assistance in caring for the children and stopped doing any household tasks.
Since separation the children have continued to live with the husband and spend time with the wife during school term in each alternate week from the conclusion of school Thursday until the commencement of school on Monday (4 out of 10 nights a fortnight) and for half the school holidays.
Senior counsel for the husband submitted that when making the 2003 financial agreement, the parties contemplated having children, and indeed the wife was pregnant at the date the 2003 financial agreement was signed, and therefore no change of a material nature in relation to the care, welfare and development of the children can be said to have arisen after the signing of the 2003 financial agreement. I am unable to accept that proposition. The parties may have contemplated children but the covenants of the agreement do not do so in any meaningful way. The fact that the parties contemplate children and then do not in any meaningful way attempt to address that possible contingency in their agreement, gives rise to the potential application of s 90K (1)(d) of the Act.
The determination about whether hardship exists is a discretionary one. A loss to the wife of the right to make an application, in which it could be reasonably anticipated she would probably succeed, would constitute hardship (see Le Poer Trench J in Pascot & Pascot at [365]).
However, senior counsel for the husband submits that the wife has not satisfied the court that she will suffer hardship if the 2003 financial agreement is not set aside, which relates to the change in the children’s care arrangements. A separate judgment published today, following a final parenting hearing will change the care to an equal time arrangement. Senior counsel for the husband submits that given that the hearing in relation to the financial agreement took place before and independently of the hearing in relation to the parenting application, then the court needs to determine the application under s 90K(1)(d) on the basis that as at the date of the hearing, the children resided primarily with the husband. I take that point and given that at the date of this hearing the children were with the husband 10 out of 14 nights during school term, I am unable to find that the wife suffers hardship as a result of her material change in circumstances, being a change in the children’s care arrangements after separation. However, unless on all other points I am incorrect, making a finding in the husband’s favour on that submission is not of relevance, as the agreement fails on so many other bases. In any event, it might be only a pyric victory, as a new parenting order will be made today which would arguably, of itself, be a material change in circumstances upon which the wife could make a fresh application under s 90K(1)(d) of the Act.
Was the 2003 financial agreement obtained by non-disclosure of a material matter (s 90K(1)(a))?
The wife relied upon the fact that properties which were disclosed by the husband in the 2003 financial agreement at values estimated by the husband in the sums of $2.4 million and $1.1 million respectively, were actually worth $1.85 million and $975,000 respectively, at the date of the 2003 financial agreement This is not a case where assets have been hidden or substantially undervalued in order to induce a party to enter terms of an agreement which would otherwise be unfair, had full disclosure of that party’s worth been made. Given that both those properties were quarantined under the terms of the 2003 financial agreement, the fact that they were overvalued in the agreement is not a material non-disclosure that would affect the efficacy of the agreement.
I do not find that the husband obtained the wife’s agreement by the non-disclosure of the matters referred to by the wife.
CONCLUSION
I find that the 2003 financial agreement is not binding.
The husband’s application for an order under s 90G(1B) of the Act is dismissed.
An order shall be made to set aside the 2003 financial agreement.
I certify that the preceding one hundred & ninety-seven (197) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 30 July 2015
Associate:
Date: 30.7.2015
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