Senior & Anderson
[2011] FamCAFC 129
•14 June 2011
FAMILY COURT OF AUSTRALIA
| SENIOR & ANDERSON | [2011] FamCAFC 129 |
| FAMILY LAW - APPEAL – (Per May J) – Property – Binding Financial Agreement – Where the subjective and common intention of the parties regarding the division of their property was properly expressed in the agreement – Where the mistakes in the agreement were of a technical nature – Where the incorrect reference to s 90C can be rectified to s 90D to reflect the parties’ true position – Where the incorrect reference to the parties’ names cannot be rectified by s 90KA but where it is appropriate to correct the solicitor’s error by reading the certificates as if they referred to the parties correctly – Where the remedial provisions in this case inevitably lead to a conclusion that it would be unjust and inequitable if the parties’ agreement is found not to be binding – Given the circumstances it is not necessary to remit the matter to the trial judge – Where this case is a good demonstration of Parliament’s intentions to not allow technical faults to be the basis for setting aside an agreement – The appeal should be dismissed. FAMILY LAW - APPEAL – (Per Strickland J) – Property – Binding Financial Agreement – Where there were errors in the Agreement and the annexed Solicitor’s Certificates – Where the Agreement is described as being a s 90C Financial Agreement instead of a s 90D Financial Agreement and where the names of the parties were incorrect in the Solicitor’s Certificates – Whether the trial judge erred in rectifying the Agreement to accord with the provisions of s 90C of the Family Law Act 1975 (Cth) and in rectifying the Solicitor’s Certificates – Whether the trial judge erred in declaring that after rectification the Agreement was a Financial Agreement pursuant to s 90D of the Act and was binding on the parties pursuant to s 90G(1) of the Act – No merit found in the grounds of appeal relating to the rectification of the mis-description of the section pursuant to which the Agreement was made and the finding that the Agreement was a Financial Agreement, although the trial judge erred in finding that the power to rectify was derived in part from the recent amendments to the Act – Merit found in the grounds of appeal relating to the rectification of the Solicitor’s Certificates and the finding that the Financial Agreement was binding on the parties pursuant to s 90G(1) of the Act – Appeal allowed and remitted to the trial judge to determine whether the financial agreement can be declared binding pursuant to s 90G(1A) and (1B) of the Act. FAMILY LAW - APPEAL – (Per Murphy J) – Property – Binding Financial Agreement – Effect of the transitional provisions of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) (“the Amending Act”) – Where the effect of Item 8A of Schedule 5 of the Amending Act on the Binding Financial Agreement was not considered by the trial judge – Where the wording of the Amending Act is not clear and unambiguous – Where guidance is required regarding the retrospective operation of the Act – Appeal allowed. FAMILY LAW - COSTS (Per Strickland & Murphy JJ) – Where the trial judge erred – Appropriate in the circumstances for both parties to be granted costs certificates for both the appeal and the re-hearing. |
| Acts Interpretation Act 1901 (Cth) Family Law Amendment Act 2003 (Cth) Family Law Act 1975 (Cth) s 4; s 71A; s 90C; s 90D; s 90G; s 90K; s 90KA Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) |
| Attorney-General (NSW) v Quin (1990) 170 CLR 1 Fitzgerald v Masters (1956) 95 CLR 420 Heyward v Planet Projects Pty Ltd [2000] NSW SC 1105 R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies, (Butterworths, 4th ed, 2002) |
| APPELLANT: | Ms Senior |
| RESPONDENT: | Mr Anderson |
| FILE NUMBER: | MLC | 9546 | of | 2008 |
| APPEAL NUMBER: | SA | 57 | of | 2010 |
| DATE DELIVERED: | 14 June 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | May, Strickland & Murphy JJ |
| HEARING DATE: | 3 March 2011 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 13 July 2010 |
| LOWER COURT MNC: | [2010] FamCA 601 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Werner |
| SOLICITOR FOR THE APPELLANT: | Gillian Coote Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Glover |
| SOLICITOR FOR THE RESPONDENT: | Rosetta Traficante |
Orders
The time for filing a Notice of Appeal be extended to 24 August 2010.
The Appeal be allowed.
Order 2 made by Young J on 30 June 2010 be set aside.
The matter be remitted to Young J for determination of whether the agreement should be declared binding pursuant to s 90G(1A) and (1B) of the Family Law Act 1975 (Cth).
There be no order for costs in relation to the costs of the appeal.
The Court grants to the wife a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the wife in respect of the costs incurred by the wife in relation to the appeal.
The Court grants to the husband a costs certificate pursuant to the provision of section 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the husband in respect of the costs incurred by the husband in relation to the appeal.
The Court grants to each party a costs certificate pursuant to the provisions of section 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the rehearing to determine whether the agreement should be declared binding pursuant to s 90G(1A) and (1B) of the Family Law Act 1975 (Cth).
IT IS NOTED that publication of this judgment under the pseudonym Senior & Anderson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 57 of 2010
File Number: MLC 9546 of 2008
| MS SENIOR |
Appellant
And
| MR ANDERSON |
Respondent
REASONS FOR JUDGMENT
May J
I have had the considerable advantage of reading the judgments of Strickland and Murphy JJ. It is not necessary for me to refer to the separate judgment of Murphy J in relation to the transitional provisions of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) as the majority have determined that the appeal be allowed. I otherwise agree with much of the reasoning of Strickland and Murphy JJ, but would depart from their opinions in one respect. Particularly, in paragraph 142 of this judgment being the reasons of Strickland J where he said:
It is clear to me that the certification must, on its face, comply with the terms of the section. A court could not be satisfied of that requirement in circumstances where, as here, the certificate refers to the provision of advice to a person named as “A” but, thereafter, refers to advice being provided to a person named “B”.
I have a different view. I would not allow the appeal.
To explain my reasons I will refer briefly to the background to this matter.
Introduction
The parties signed a document headed “Section 90C Financial Agreement” on 27 July 2009. At the time the document was signed they were divorced.
The provisions of section 90D of the Family Law Act 1975 (Cth) (“the Act”) apply to financial agreements made after a divorce. The document incorrectly refers to section 90C which makes provision for financial agreements during marriage.
The other difficulty is that the parties were referred to as “Patricia” and “Chris” in part of the document requiring their respective solicitors to certify that the parties had received their advice. This mistake made in the case of the wife’s solicitor correctly identified her as Ms Senior, but then said that he had advised “about the effect of this agreement on Patricia’s rights”. A similar mistake was made by the solicitor for the husband. At the commencement of the relevant paragraph he referred to Mr Anderson but then referred to him as “Chris”. The certificate was on one page. At the bottom of each certificate the parties confirmed their receipt and comprehension of the solicitors’ advice. Their correct names were there used.
After the documents were signed the wife wished to resile from the arrangements. An application was filed. The amended application filed on 17 March 2010 asked for, inter alia, “[a] declaration that the document dated 27 July 2009 and marked SS-4 and exhibited to the affidavit sworn by the Applicant on 17 March 2010 is not a financial agreement within the meaning of section 90D of the Act”. (original emphasis)
The orders made by the judge on 30 June 2010 relevantly are as follows:
1.IT IS DECLARED that the agreement executed on or about 27 July 2009 by the husband and wife is a financial agreement pursuant to s90D of the Family Law Act 1975 (Cth).
2.THAT such financial agreement and the annexed Solicitor’s Certificates, in the current form as drafted, be rectified to accord with the provisions of s90D of the Act.
...
The wife appeals on a number of grounds. It is submitted that the judge should have found that the formal statutory requirements for a financial agreement were not satisfied and that the errors could not be rectified or ignored.
The reasons for judgment
At the commencement of his reasons Young J correctly identified the issues before him for determination as follows:
1.These proceedings came before me for legal argument on the first day of hearing on 10 May 2010. I have subsequently had the benefit of reading detailed written legal submissions, together with all of the Court documents filed in the proceedings, which have identified that the initial legal issues to be first determined by the Court are:
(a)is the agreement signed by each of the husband and wife (“the parties”) on 27 July 2009 a financial agreement within the definition of s 4 and s 71A of the Family Law Act 1975 (Cth) (“the Act”)?; and
(b)if so, is such an agreement binding upon each of the parties?
The judge was asked to limit his reasons and orders to a consideration of the validity of the agreement and not other orders sought in the application. The husband sought the dismissal of the wife’s application. The hearing was conducted without oral evidence and entirely upon both written and oral submissions by reference to affidavits filed on behalf of the parties.
The reasons of the trial judge set out the necessary background facts. It is unnecessary to repeat them here other than to observe that a decree nisi was pronounced in December 2008.
In general terms the agreement provided for the wife to receive a cash sum of $28,000 and for the husband to retain the remaining property and assets which included a shop that contained a residence and a separate property being the husband’s place of residence.
As his Honour correctly observed the agreement was “poorly drawn”. The error in making reference to section 90C appears on the face of the document as a heading and in clause 1:
This deed is and is intended to have effect as a deed pursuant to section 90C and part VIIIA of the Family Law Act 1975 (Commonwealth). There is no other agreement in force pursuant to section 90B, 90C or 90D of the Family Law Act 1975 (Commonwealth) or section 285 of the Property Law Act 1958 (Victoria).
As was correctly observed by the judge:
20.… As the parties were divorced the agreement could only have been validly drawn and entered into pursuant to s 90D of the Act.
As I agree with the reasons of Strickland and Murphy JJ as to this aspect of the appeal, it is not necessary for me to deal with this part of the appeal further.
As already noted, the other difficulty is that the parties were wrongly named in what is called the “Solicitors Certificate”. The signature blocks in each respective certificate were signed and dated by the appropriate party. To appreciate this error it is necessary to reproduce each certificate:
CERTIFICATE
I, [Wife’s Solicitor] of … Victoria, being a Solicitor holding a current practicing certificate pursuant to the Legal Profession Act 2004 (Victoria) hereby certify that before she signed this deed I advised [Ms Senior] of:
1.The fact that I am a duly qualified legal practitioner holding a current practising certificate to the Legal Profession Act 2004 (Vic).
2.The effect of this agreement on Patricia’s rights.
3.The advantages and disadvantages, at the time that the advice was provided, to Patricia of making the agreement.
(Signed)
__________________
[Wife’s Solicitor]
Date: 20/7/09
I, [Ms Senior] of C/- [Solicitors Office] confirm receipt and comprehension of the above advice before I signed this deed.
(Signed)
__________________
[Ms Senior]
Date: 22/7/09
(original emphasis)
There is no doubt that the document was signed by the wife’s solicitor and dated 20 July 2009 and signed by Ms Senior and dated 22 July 2009.
CERTIFICATE
I, [Husband’s Solicitor] of … Victoria, 3000, Solicitor holding a current practicing certificate pursuant to the Legal Profession Act 2004 (Victoria) hereby certify that before he signed this deed, I advised [Mr Anderson] of:
1.The fact that I am a duly qualified legal practitioner holding a current practising certificate to the Legal Profession Act 2004 (Vic).
2.The effect of this agreement on Chris’s rights.
3.The advantages and disadvantages, at the time that the advice was provided, to Chris of making the agreement.
(Signed)
__________________
[Husband’s solicitor]
Date: 27-07-2009
I, [Mr Anderson] of … Victoria, confirm receipt and comprehension of the above advice before I signed this deed.
(Signed)
__________________
[Mr Anderson]
Date:27-07-2009
(original emphasis)
There is no doubt that the document was signed by the husband’s solicitor and dated 27 July 2009 and signed by Mr Anderson and dated 27 July 2009.
It was uncontroversial that each party had received legal advice from his or her solicitor and that they had signed the certificates. The wife relied upon an affidavit from her solicitor filed 6 November 2009.
The judge said of the mistakes in the certificate:
26.A legal precedent document was most likely carelessly copied without reading or appropriate amendment as to the incorrect given names of each of the clients within clauses 2 and 3 of the respective certificates. It must however be recorded that each of the certificates do elsewhere correctly identify the client by name and each of the clients have otherwise acknowledged receipt and comprehension of the advice on that same certificate. Whilst these inaccuracies should have most certainly been identified by both solicitors and each of the clients nevertheless I find that the parties each received and acknowledged their legal advice and their names are recorded in bold type on each of those certificates and each of them should not or could not have been under any misunderstanding that the advice was pertinent to each of them and not any other wrongly named individual.
Based on the wife’s own evidence, contained in the affidavit filed 17 March 2010 in relation to the advice given by the solicitors his Honour concluded:
41.… On that evidence I find that the wife did intend to enter into a final and binding agreement pursuant to the Act by which she knew of and intended to oust the jurisdiction of the Court from further hearing and determining any division of property as between her husband and herself.
In relation to the financial agreement the judge made the following findings:
49.As to the agreement executed by the parties and dated 27 July 2009 I find that:
(a)the agreement was executed by each of the parties and witnessed by their solicitors;
(b)the husband and wife each received legal advice upon the division of assets and the proposed property settlement from their then solicitor;
(c)the wife’s then intention was to enter into a binding financial agreement;
(d)the husband’s then intention was to enter into a binding financial agreement;
(e)the agreement was drafted by the husband’s then solicitor;
(f)each of the Solicitor’s Certificates annexed to the agreement is properly addressed to their respective client in the introductory paragraph on that Certificate and again where each of the clients confirmed receipt and comprehension of such legal advice;
(g)the wife received clear and understandable legal advice upon the adequacy of her proposed property settlement and the finality of the executed agreement;
(h)the agreement is clear and definite as to the identification of the assets, liabilities and personal chattels of the parties and as to their manner of division between each of them;
(i)the husband has caused to be forwarded to the wife’s solicitors a cheque for the required settlement sum of $28,000 which has been held, without banking, by that solicitor for and on behalf of the wife and pending conclusion of these proceedings; and
(j)the parties each received the required legal advice in (b) hereof from an appropriately qualified Australian Legal Practitioner.
In relation to the solicitors certificates it was said:
51.Each of the Solicitor’s Certificates are not endorsed by any reference to a section of the Act. They do not state that the advice is given pursuant to either of s 90C or, in the alternative, s 90D. They merely record that the then practising solicitor acting for each of the husband and wife gave their client advice before the agreement was signed.
52.I have already identified the error in each of the Certificates as contained in clauses 2 and 3 thereof where a precedent agreement had most likely not been updated to include the correct given names of each of these clients.
53.The inclusion of the names “Patricia” and “Chris” are an error by solicitors, perhaps that which could even be described as a “slip” were it not so serious which should have been identified by them and which the clients should have corrected when signing for receipt of that advice upon the Certificate document itself.
54.The submission of the husband’s solicitors is that the inclusion of these erroneous names are merely “unintended, typographical errors” and each of them individually and all of them collectively amount to a technical error(s) that is wholly insufficient to enable the other party having made an informed decision to enter into this agreement to now avoid its agreed terms and the concluded property settlement.
55.I have reached a firm conclusion that the errors upon the Certificate(s) can and should be corrected, that they were unintended errors and they should not and do not negate the professional legal advice given to each of the parties. They are not errors that are fatal to the binding nature of the agreement and in their reflect and circumstances they are different to the facts of Balzia and Covich (2009) FamCA 1357 where Collier J reached a different conclusion. (original emphasis)
The essence of the appeal is that it was necessary for the document to comply strictly with the legislation and that it is not possible to rectify the document in relation to the wrong names being used and the wrong section being referred to.
His Honour considered the submissions described in this appeal as the “strict compliance test” by reference to Black & Black (2008) FLC 93-357.
In Black & Black the financial agreement failed to include a statement that the parties had received independent legal advice in relation to all matters required by the legislation as it was then drafted. The Full Court held that strict compliance with the statutory requirements was required to oust the jurisdiction of the court. After the decision of Black & Black the Act was amended by the Federal Justice System Amendment (Efficiency Measures) Act 2009. The result was that section 90G was amended. It was argued on behalf of the wife that despite the amendments, the decision in Black & Black requiring strict compliance remains the law.
The first question is whether there is a financial agreement then whether it is binding. It is important to set out the current provisions in full.
The legislation
The applicable section of the Act in this case is as follows:
SECTION 90D
Financial agreements after divorce order is made
(1) If:
(a) after a divorce order is made in relation to a marriage (whether it has taken effect or not), the parties to the former marriage make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa) at the time of the making of the agreement, the parties to the former marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90C) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement. The parties to the former marriage may make the financial agreement with one or more other people.
(2) The matters referred to in paragraph (1)(a) are the following:
(a) how all or any of the property or financial resources that either or both of the spouse parties had or acquired during the former marriage is to be dealt with;
(b) the maintenance of either of the spouse parties.
(3) A financial agreement made as mentioned in subsection (1) may also contain:
(a) matters incidental or ancillary to those mentioned in subsection (2); and
(b) other matters.
(4) A financial agreement (the new agreement) made as mentioned in subsection (1) may terminate a previous financial agreement (however made) if all of the parties to the previous agreement are parties to the new agreement.
The second question is whether the financial agreement is binding:
SECTION 90G
When financial agreements are binding
(1) Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d) the agreement has not been terminated and has not been set aside by a court.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995 .
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c) a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application ) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary. (original emphasis)
Counsel for the husband referred his Honour to the second reading speech of the Attorney-General dated 3 December 2008 and when introducing the amended legislation in Parliament it was said that:
Schedule 5 to the Bill amends the binding financial agreements and termination agreements pursuant to the provisions of the Family Law Act 1975 to relax certain technical requirements that must be strictly satisfied for financial agreements and termination agreements to be binding. These amendments will respond to the concerns about binding financial agreement provisions of the Act that have arisen following the decision of the Full Court of the Family Court in Black v Black. The Family Law Council has confirmed that amendments are required to restore confidence in the binding nature of these agreements. (original emphasis)
The legislative amendments had retrospective operation to all agreements made on or after 27 December 2000 and thus affect the document executed by the parties on 27 July 2009.
Referring to the question of what is a mere technicality, his Honour concluded that each of the five areas in the agreement to which reference has been made “… whilst legally substantial are of a technical nature which can or should be rectified” (Reasons paragraph 85). Appropriately his Honour referred to an unreported decision of Collier J in Balzia & Covich (2009) FamCA 1357 a document with similar problems. Collier J found that the document could not be rectified as the certificate specifically and wrongly identified section 90B whereas there should have been reference to section 90C. In the document with which we are concerned the certificates did not refer to any sub-section of the Act.
There can be no doubt that his Honour was correct when he said at paragraph 94:
On the facts of this case the parties negotiated and concluded an agreed contract for a division of their property. They were in complete agreement at the time of execution of that contract as to its terms. The mistakes were of a legal or identification issue unknown to the parties and of a kind that should have been known to their solicitors. The agreement simply does not reflect the common intention and outcome as negotiated by the parties. The subjective and common intention of the parties was properly expressed within the agreement, but save for the technical errors.
It was argued by counsel for the wife before his Honour by reference to the provisions of section 90KA that the court can only rectify an agreement that is a financial agreement within the Act. It is useful to set out the provisions of section 90KA:
SECTION 90KA
Validity, enforceability and effect of financial agreements and termination agreements
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(emphasis added)
Young J dealt directly with the argument of the wife that to apply section 90KA was an error because the section was being used to create a financial agreement when there was none in the first place. His Honour rejected this argument and referred to a decision of the Full Court in Kostres and Kostres (2009) FLC 93-420. His Honour was correct in concluding that the purpose and intent of section 90KA is primarily one of enforcement, however, the section also applies the general law to determine “the validity, enforceability and effect of contracts”. To the extent that it is necessary section 90KA imports the common law into these provisions. It is undoubtedly correct that the validity of an agreement is to be determined by reference to the document itself. To be binding in this case the provisions of section 90G must be satisfied (albeit through section 90G(1A).
Ultimately, the rectification intended by his Honour’s orders required each of the three references to section 90C being changed to section 90D and also the insertion of the correct names of the parties in clauses 2 and 3 of the annexed solicitors certificates. Having rectified the document his Honour then declared that the document executed by the parties on 27 July 2009 was a financial agreement pursuant to section 90D of the Act.
The careless reference to section 90C rather than section 90D can be rectified to reflect the parties’ true position.
The erroneous names are in a different category – they were a failure to observe the requirements of section 90G and so cannot be rectified by use of section 90KA. But all the facts point to a careless error by the solicitors, having no impact on the parties. It is appropriate to correct the error by reading the certificates as if they referred to the parties correctly – see the general principles of construction as explained by the High Court in Fitzgerald v Masters (1956) 95 CLR 420 at p 426-427 where Dixon CJ and Fullagar J said:
There is a superficial difficulty in cl. 8, because it purports to incorporate a set of conditions so far as they are inconsistent with what has been specifically agreed upon. No real difficulty, however, is created. Words may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency. Here it would be indeed absurd to suppose that the parties, having expressed their agreement on a number of special and essential matters, should intend to incorporate by reference terms inconsistent with what they had specially agreed upon. What they must clearly have intended is to incorporate a set of general conditions except so far as they were inconsistent with what they had specially agreed upon, and cl. 8 must be read as if it said “consistent” or “not inconsistent”. (original emphasis)
Should it be thought that is not the correct approach then the unjust and inequitable provision in section 90G(1A)(c) would apply. These remedial provisions in this case inevitably lead to a conclusion that it would be unjust and inequitable if the parties’ agreement is found not to be binding on them. It is not necessary in my view to remit the matter to the trial judge. There were submissions in relation to the “unjust and inequitable” provisions made to this court in both oral and written submissions, such that there was attention given to that provision. (See para 20 written submissions of appellant)
This case is a good example of Parliament’s intentions, not to allow technical faults to be the basis for setting aside the parties express agreements.
Costs
I would agree with the summary of Strickland J in relation to what the parties said about costs. As I would not allow the appeal, I would make no order in relation to the costs of the appeal. As in my view there is no reason for the matter to be remitted to Young J, I would not make orders granting either party certificates pursuant to the provisions of the Federal Proceedings (Costs) Act1981 (Cth).
Strickland J
Introduction
On 27 July 2009 the wife and the husband executed an agreement. According to its heading and cover sheet, the agreement was a “SECTION 90C FINANCIAL AGREEMENT”. Clause 1 of the agreement’s operative provisions specifies:
This Deed is and is intended to have effect as a deed pursuant to Section 90C and Part VIIIA of the Family Law Act 1975 (Commonwealth). There is no other agreement in force pursuant to Section 90B, Section 90C or 90D of the Family Law Act 1975 (Commonwealth) or Section 285 of the Property Law Act 1958 (Victoria).
By its further terms, the agreement purported to bring to an end the financial relationship between the parties to this marriage and to operate in substitution for, and to exclude, the provisions of Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
The agreement could neither be described properly as a “SECTION 90C FINANCIAL AGREEMENT” nor, by its operative terms, could it purport to be so; the parties were divorced at the time of entering the agreement. By reason of that circumstance, the agreement, if it was to be effective in the manner to which it was directed, needed to be made pursuant to s 90D of the Act, and not s 90C, and to be “binding” within the meaning of the Act.
At the hearing before the trial judge on 10 May 2010 the wife asserted that the agreement between the parties was not a “financial agreement” within the meaning of the Act, and was not, therefore, effective to exclude Part VIII of the Act. She sought a declaration to that effect and consequential orders pursuant to Part VIII. The husband asserted that the agreement was binding and effective as a “financial agreement”. He sought a declaration to that effect and, as a consequence, the dismissal of any claim by the wife pursuant to Part VIII of the Act.
By agreement between the parties the trial judge was asked to limit his reasons and orders to a consideration of the validity of the agreement and not to address other orders sought in the application. The hearing was conducted without oral evidence and entirely upon both written and oral submissions by reference to affidavits filed on behalf of the parties.
In addition to the principal error referred to above, the agreement had other errors. Those errors were also the subject of competing contentions as to their effect by reference to the requirements of the Act for “financial agreements”.
Section 90G of the Act requires, in broad terms, a legal practitioner to give independent legal advice to each party (referred to in the Act as a “spouse party”) about the effect of the agreement and its advantages and disadvantages, and to provide a written statement to that party stating that advice of that type had been given with a copy to the other party. That statement was provided in this agreement by way of a “certificate” appended to the agreement. Each of the legal practitioners’ statements (or “certificates”) referred, in their respective preambles, to giving advice to the parties correctly named but, in their succeeding specific sub-paragraphs referred to names wholly unconnected with the parties.
In summary, the trial judge declared that the agreement was a financial agreement pursuant to s 90D of the Act, that the agreement was to be rectified to correct all of the errors, and his Honour dismissed paragraph 1 of the wife’s Amended Initiating Application filed 17 March 2010 in which the wife had sought a declaration that the agreement was not a financial agreement.
As will be seen, central to his Honour’s decision was a classification of the errors and omissions as “technical” and a finding that the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth), which, inter alia, amended s 90G of the Act, provided relief against a strict interpretation of the requirements of the Act so as to permit rectification of the agreement in the manner referred to.
By Amended Notice of Appeal filed on 27 January 2011 the wife appeals against the orders made by the trial judge on 20 June 2010 in relation to the financial agreement.
The husband in his written summary of argument raised the valid complaint that the original Notice of Appeal was filed out of time on 24 August 2010. It should have been filed by 10 August 2010. As a result, at the hearing before us, the wife made an oral application for an order nunc pro tunc extending the time for filing the Notice of Appeal to 24 August 2010. The husband consented to this application and we will now formally make that order.
Factual Background
At the time of the hearing before the trial judge the wife was aged 40 years and the husband aged 54 years. Both parties were born in Egypt.
The husband emigrated to Australia in 1983. The parties were married in Egypt in September 1989 and the wife came to Australia in December of that year.
There are no children of the marriage.
The parties separated in March 2006 and their divorce became absolute in January 2009.
According to the trial judge, the agreement executed on 27 July 2009 provided in general terms that the wife was to receive a cash sum of $28,000, and the husband was to otherwise own and retain the remaining property and assets, comprising a shop and upstairs residence in B, Victoria and the husband’s place of residence in W. Both properties were at that time registered in the joint names of the husband and wife as tenants in common.
On 17 March 2010 the wife filed an Amended Initiating Application, seeking:
a)a declaration that the document dated 27 July 2009 was not a financial agreement within the meaning of s 90D of the Act;
b)in the alternative a declaration that it was not binding for want of compliance with s 90G(1)(b);
c)in the alternative a declaration that the document was not binding for want of compliance with s 90G(1)(c) of the Act; or
d)finally, an order pursuant to s 90K of the Act setting aside the financial agreement.
The wife also sought orders as to property settlement under s 79 of the Act.
The husband filed a response on 30 April 2010 seeking that the wife’s application be dismissed.
The hearing took place initially before the trial judge on 10 May 2010. Thereafter written submissions were filed and on 30 June 2010 his Honour called the matter on and pronounced the orders the subject of this appeal, with the reasons to follow shortly thereafter. The reasons for judgment were delivered on 13 July 2010.
Orders made on 30 June 2010
The trial judge made the following orders on 30 June 2010:
1)IT IS DECLARED that the agreement executed on or about 27 July 2009 by the husband and the wife is a financial agreement pursuant to s90D of the Family Law Act 1975 (Cth).
2)THAT such financial agreement and the annexed Solicitor’s Certificates, in the current form as drafted, be rectified to accord with the provisions of s90D of the Act.
3)THAT paragraph 1 of the wife’s amended application filed 17 March 2010 be otherwise dismissed.
4)THAT the issue of costs arising from these orders are reserved to the trial judge.
5)THAT the hearing of all extant applications be listed as a continuing defended hearing before Young J on 23 July 2010 at 10.00am.
6)THAT any further interim application to be filed by solicitors for either of the parties is to be filed and served by 2 July 2010 and made returnable on 23 July 2010 before Young J.
7)THAT the defended hearing fixed before Young J at 10.00am on 2 July 2010 be vacated.
The wife appeals orders 1, 2 and 3.
Reasons for judgment of the trial judge
The trial judge first identified that the two issues to be determined by the Court were:
1)
whether the agreement was a financial agreement within the definition in
s 4 of the Act; and
2) if so, was such an agreement binding on the parties.
His Honour then recorded the orders sought by the wife, before outlining the process the hearing had taken and that his Honour had pronounced final orders on 30 June 2010. His Honour then recorded the background facts and the documents read and upon which the parties relied.
The trial judge then turned to consider the terms of the agreement itself (at [18] to [27]). Inter alia, the trial judge recorded that the agreement was expressed to be a financial agreement drawn pursuant to s 90C, which his Honour found was a “legal error” as the parties were divorced and the agreement should have been drawn pursuant to s 90D. His Honour also recorded that there were errors in the certificates of legal advice provided, in that they contained the incorrect names of the parties.
The trial judge then turned to consider the legal advice given to the wife in relation to the agreement. The trial judge then discussed an objection which had been raised by the husband to the wife’s solicitor continuing to act for her.
At [41] the trial judge said that he accepted the wife’s evidence of and related to the agreement, and her knowledge and understanding of the finality of it, and accepted the fact of the legal advice given by her solicitor. His Honour found on that evidence that the wife did intend to enter into a final and binding agreement pursuant to the Act, which she knew and intended would oust the jurisdiction of the Court.
After considering the husband’s evidence, the trial judge outlined his findings upon the agreement as follows:
49.As to the agreement executed by the parties and dated 27 July 2009 I find that:
(a)the agreement was executed by each of the parties and witnessed by their solicitors;
(b)the husband and wife each received legal advice upon the division of assets and the proposed property settlement from their then solicitor;
(c)the wife’s then intention was to enter into a binding financial agreement;
(d)the husband’s then intention was to enter into a binding financial agreement;
(e) the agreement was drafted by the husband’s then solicitor;
(f)each of the Solicitor’s Certificates annexed to the agreement is properly addressed to their respective client in the introductory paragraph on that Certificate and again where each of the clients confirmed receipt and comprehension of such legal advice;
(g)the wife received clear and understandable legal advice upon the adequacy of her proposed property settlement and the finality of the executed agreement;
(h)the agreement is clear and definite as to the identification of the assets, liabilities and personal chattels of the parties and as to their manner of division between each of them;
(i)the husband has caused to be forwarded to the wife’s solicitors a cheque for the required settlement sum of $28,000 which has been held, without banking, by that solicitor for and on behalf of the wife and pending conclusion of these proceedings; and
(j)the parties each received the required legal advice in (b) hereof from an appropriately qualified Australian Legal Practitioner.
His Honour concluded that there was a “marked lack of care, or otherwise knowledge and understanding”, by the parties’ solicitors in drawing the agreement pursuant to s 90C rather than s 90D of the Act.
The trial judge then had regard to the lawyer’s certificates. His Honour concluded that the errors in the certificates could and should be corrected as they were unintended and should not, and did not, negate the professional legal advice given to the parties. His Honour found the errors were not fatal to the binding nature of the agreement.
His Honour then outlined the relevant law applicable to financial agreements in the Act.
The trial judge then addressed the issue that the agreement was wrongly expressed as being pursuant to s 90C when it should have been s 90D. His Honour concluded that the incorrect references to s 90C on the coversheet and in a heading to the recitals did not negate the parties’ common intention, and that the references did not impede or negate the clear and unambiguous objective of the parties. His Honour said that the incorrect reference in clause 1 of the substantive part of the agreement was a more significant mistake, but nevertheless this had no influence or impact on the parties. His Honour thus found that the error should be rectified (at [76] and [77]).
Under the heading “Legal Principals [sic]” the trial judge referred to the decision of Black and Black (2008) FLC 93-357 and the Federal Justice Systems Amendment (Efficiency Measures) Act (No 1) 2009 which amended, inter alia, s 90G, and the explanatory memorandum. His Honour said this:
85.Whilst it was a very different issue that was before the Full Court in Black & Black and which then led to the legislative amendments to the Act the principle however was the intent and actions of the Parliament to somewhat limit the strict compliance test. The concern of Government was to avoid the consequences of technical errors and thus the Act was amended so as to ensure that people who have made an informed and common decision to enter into a binding financial agreement cannot later avoid, or have the binding nature of such an agreement, dismissed on a mere technicality. What is a mere technicality is not defined by the Parliament or the amending legislation and that issue has been the subject of my deliberations in this matter. I have concluded that each of the five errors in the agreement, whilst legally substantial are of a technical nature that can and should be rectified.
His Honour then had regard to the authorities dealing with the issue of rectification, specifically, Balzia and Covich (2009) FamCA 1357, Ryledar Pty Ltd & Anor v Euphoric Pty Ltd (2007) 69 NSW LR 603, Ruane & Bachman-Ruane & Ors (2009) FamCA 1101 and Fevia & Carmel-Fevia (2009) FLC 93-411, before outlining his conclusions on the issue of rectification.
His Honour determined that the agreement should be rectified in a manner “consistent with the true intentions of the parties and the financial outcome that they intended to conclude”. His Honour said he had concentrated on the parties’ subjective intentions and that the parties were in complete agreement as to the terms of their contract as to the division of assets. His Honour found that the error of the incorrect reference to the section of the Act was an error not intended by the parties and should be the subject of correction and rectification.
The trial judge also had regard to the provisions of s 90KA of the Act and the wife’s submissions with respect to rectification. The wife had argued rectification was not available to the Court. His Honour made reference to the Full Court’s discussion of the effect of s90KA in Kostres and Kostres (2009) FLC 93-420. Ultimately, his Honour did not accept the wife’s argument as to the interpretation and construction of s 90KA, finding that the purpose and intent of the section is primarily one of enforcement, and that the validity of the document is to be determined by reference to the document itself and its compliance with s 90D. His Honour found the validity of the agreement is not to be determined by s 90KA.
The trial judge said he was rectifying an unintended and unknown technical legal error of the solicitors and was able to do so pursuant to equitable principles and the Act.
After further considering the provisions of s 90KA and the issue of rectification his Honour concluded (at 115):
For all of the reasons therefore considered in this judgment I conclude that it is proper that I make orders to rectify each of the technical errors within the agreement. That rectification required each of the three references to s 90C being changed to s 90D and also the insertion of the correct given names of the parties in clauses 2 and 3 of the annexed Solicitor’s Certificates. I conclude that is a just, appropriate and intended outcome. When so rectified I declare that the agreement executed on 27 July 2009 by each of the husband and wife is a financial agreement pursuant to s 90D of the Act. I am satisfied that the husband discharged his onus of proof in these proceedings.
Grounds of appeal
The Amended Notice of Appeal filed on 27 January 2011 contains eleven grounds of appeal as follows:
1.The learned trial judge erred in finding that the agreement signed by the parties on or about 27 July 2009 (the Purported Agreement) was a financial agreement within the meaning of section 71A of the Act. His Honour should have found that the Purported Agreement failed to satisfy the formal statutory requirements for a financial agreement and, hence, was not a financial agreement.
2.The learned trial judge erred in that, in finding that the Purported Agreement was a financial agreement within the meaning of section 71A of the Act, His Honour failed to apply the strict compliance test for which Black v Black (2008) FLC 93-357 is authority (the Strict Compliance Test).
3.The learned trial judge erred in having regard to the intentions of the parties in finding that the Purported Agreement was a financial agreement. His Honour should have found that, for the purpose of characterizing a document as a financial agreement within the meaning of section 71A of the Act, the parties’ intentions were irrelevant.
4.The learned trial judge erred by applying a test of (sic) based on degree of error in determining whether the Purported Agreement was a financial agreement within the meaning of section 71A of the Act (see, in particular, paragraphs 76 – 77 and 85 of His Honour’s Reasons for Judgment). His Honour should have applied the Strict Compliance Test.
5.The learned trial judge erred in law in finding that the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 (the Amending Legislation) limited the Strict Compliance Test (see, in particular, paragraph 85 of His Honour’s Reasons for Judgment). His Honour should have found that the Amending Legislation did not limit, invalidate, alter or diminish the Strict Compliance Test.
6.The learned trial judge erred in placing any weight (or, alternatively, undue weight) on materials extrinsic to the Amending Legislation in determining not to apply the Strict Compliance Test. His Honour should have relied solely on the plain and unambiguous wording of the Amending Legislation to determine the extent, if any, to which it limited, invalidated, altered or diminished the Strict Compliance Test.
7.The learned trial judge erred in rectifying the Purported Agreement in order to satisfy the formal legislative requirements for financial agreements prescribed by section 90D(1)(b) of the Act. His Honour should have held that it was not open to the Court to apply the doctrine of rectification, whether pursuant to section 90KA of the Act or otherwise, to correct a failure by the parties to satisfy the formal legislative requirements for financial agreements.
8.The learned trial judge erred in rectifying the certificates of independent legal advice annexed to the Purported Agreement in order to satisfy the formal legislative requirements of section 90G of the Act. His Honour should have held that the Court had no power to rectify such certificates.
9.The learned trial judge erred in finding that the errors in the certificates of independent legal advice annexed to the Purported Agreement were not “fatal to the binding nature of the agreement” (see, in particular, paragraph 55 of His Honour’s Reasons for Judgment). His Honour should have:
a.Applied the Strict Compliance Test to section 90G(1)(c) of the Act;
b.Found the Agreement was not binding within the meaning of sections 71A and 90G of the Act; and
c.Held that the question of whether the Court should exercise its discretion pursuant to subsections 90G(1A) and (1B) to declare the agreement binding notwithstanding non compliance was a matter for determination at trial.
10.The learned trial judge erred in finding, as a fact, that the Appellant Wife received legal advice required by the section 90G of the Act (Reasons, paragraph 49(j)). The presently unchallenged affidavit evidence of the Wife’s then solicitor … was that he did not advise the Wife as to the advantages of entering into the Purported Agreement.
11.The learned trial judge erred in finding, as a fact, that the references to section 90C in the agreement and the certificates annexed to it were “unintended and unknown”. (Reasons, paragraph 107). There was no evidence capable of supporting that finding.
Counsel for the wife indicated to us that ground 1 is the principal ground of appeal, supported by grounds 3 and 4. Further, grounds 2, 5 and 6 can be grouped together, as can grounds 8 and 9, and grounds 7 and 11. Ground 10 is a discrete ground of appeal.
For my part, I propose to address the grounds of appeal in a slightly different order than counsel for the wife suggests. I propose to consider grounds 1 and 7 together, and ground 11 separately.
Orders sought
In summary, the wife seeks:
a)that orders 1 to 3 made by the trial judge be set aside;
b)that the court declare the agreement is not a financial agreement within the meaning of s 71A of the Act;
c)or, in the alternative, that the court declare that the financial agreement is not binding on the parties.
The wife also seeks that the proceedings be remitted to the trial judge for a determination of whether there should be any adjustment of property interests pursuant to s 79 of the Act, or in the alternative that if the agreement is found to be a financial agreement, that the matter be remitted to the trial judge for determination of whether the agreement should be declared to be binding pursuant to s 90G(1A) and (1B), and whether there should be any adjustment of property interest pursuant to s 79.
The husband seeks that the wife’s appeal be dismissed.
The legislative framework
I consider that it is essential in this appeal to set out the relevant sections of the Act as follows.
The provisions with respect to financial agreements are found in Part VIIIA of the Act.
Section 71A provides:
(1) [Matters in financial agreements] This Part does not apply to:
(a) financial matters to which a financial agreement that is binding on the parties to the agreement applies; or
(b) financial resources to which a financial agreement that is binding on the parties to the agreement applies.
…
Thus, importantly, the court’s power to make an order for property settlement pursuant to s 79 of the Act is removed in respect of “financial matters” to which a “financial agreement” applies if that “financial agreement” is binding. The expressions “financial matters” and “financial agreement” are defined in
s 4 of the Act as follows:
Financial agreement means an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante-nuptial or post-nuptial settlement to which section 85A applies.
Financial matters means:
(a) in relation to the parties to a marriage – matters with respect to:
(i) the maintenance of one of the parties; or
(ii) the property of those parties or of either of them; or
(iii) the maintenance of children of the marriage; or
…
Section 90D of the Act provides for financial agreements where the parties are divorced. Relevantly, the section provides:
(1) [“Financial agreement”] If:
(a)after a divorce order is made in relation to a marriage (whether it has taken effect or not), the parties to the former marriage make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa)at the time of the making of the agreement, the parties to the former marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90C) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement. The parties to the former marriage may make the financial agreement with one or more other people.
(2)[Specified matters] The matters referred to in paragraph (1)(a) are the following:
(a)how all or any of the property or financial resources that either or both of the spouse parties had or acquired during the former marriage is to be dealt with;
(b) the maintenance of either of the spouse parties.
(3)[Incidental or ancillary matters] A financial agreement made as mentioned in subsection (1) may also contain:
(a)matters incidental or ancillary to those mentioned in subsection (2); and
(b) other matters
Despite its wide circulation as a term of convenience, the expression “binding financial agreement” is not defined in the Act. Rather, as can be seen, the Act refers to and defines a particular form of agreement called a “financial agreement”. Further, as s 4 makes plain, a “financial agreement” has two essential components. It must first be “an agreement”, and it must also be an agreement that is made “under section 90B, 90C or 90D.”
“Agreement” is also not defined and thus carries its ordinary and natural meaning. Accordingly, just as with any agreement, principles of law and equity will apply so as to vitiate the agreement if the relevant circumstances are made out. So it is, in my view, with an agreement that purports on its face, to be a “financial agreement”. That interpretation is reinforced by s 90KA, noting that this section refers to “financial agreements” as distinct from “agreements”.
Section 90G as now in force provides:
(1)[Requirements for binding agreement] Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a court.
(e) (Repealed by No 122 of 2009, Sch 5 Pt 1 item 4.)
(1A)[Binding nature of financial agreement] A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c), and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court. (a) the agreement is signed by all parties; and
(1B)[Declaration that financial agreement binding] For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
Schedule 5, Part 1 items 8 and 8A of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 contains the relevant transitional provisions with respect to the amendments to s 90G. Those transitional provisions in effect provide for the amending legislation to have retrospective effect. However, save and except to say that the Act, and particularly s 90G applies to the agreement in this case, I do not propose to detail the transitional provisions. In my view they are not relevant to the determination of this appeal. There is no ground of appeal directed to this issue, and there was no submission by the wife that his Honour erred in his treatment of this aspect of the legislation.
Section 90K details the circumstances in which the court may set aside a financial agreement or termination agreement.
Section 90KA deals with the “validity, enforceability and effect of financial agreements and termination agreements” and provides:
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
The Act in effect draws a distinction between agreements which are financial agreements (s 4, s 90B, s 90C, s 90D) and those financial agreements which are binding (s 90G). Financial agreements can, like any other agreement, govern the actions of the parties to them and bind the parties to obligations, but do not oust the jurisdiction of the court. Parties to an agreement that satisfies the definition of “financial agreement” are bound by its terms (or not bound as the case may be), just as they would be bound (or not bound) by any other agreement (s 90KA) (see generally Australian Securities and Investment Corporation and Rich & Anor (2003) FLC 93-171).
Section 90G is irrelevant to the contractual rights and remedies of the parties to an agreement that satisfies the definition of “financial agreement”. That section only becomes relevant when the issue is whether an agreement that satisfies the definition of “financial agreement” is effective for a specific statutory purpose, namely to operate as a bar to claims by either party pursuant to Part VIII of the Act (s 71A). It will be so, if and only if, it is “binding” within the meaning of s 90G.
If an agreement, including an agreement that satisfies the definition of “financial agreement” under the Act, fails to effectively bar Part VIII claims (because of its failure to comply with the requirements of s 90G and, as a result, is not “binding” within the meaning of that section) the financial agreement can nevertheless have an affect. However, an agreement’s failure to be “binding” in the s 90G sense renders its use in Part VIII proceedings to be very limited; specifically it does not operate as a bar to orders made under that Part (see e.g. Woodland and Todd (2005) FLC 93-217 at paragraphs 37 – 39).
I consider this distinction to be important to the issues in this appeal. In particular, the distinction is important with respect to the application of any remedies in contract or equity which might apply to a financial agreement, including, specifically, rectification. I also consider the distinction important in any discussion of, or the application of, what the wife’s counsel called the “strict compliance test”.
Discussion
Turning to the grounds of appeal.
Grounds 1 and 7
Unfortunately the wife’s counsel in his summary of argument addressing this ground failed to recognise the distinction that the Act draws between agreements which are financial agreements and those financial agreements which are binding.
What counsel is saying here is that the agreement is not a financial agreement, and it does not oust the court’s jurisdiction pursuant to
s 79 of the Act (s 71A) because the formal statutory requirements to be a financial agreement have not been satisfied (i.e., s 90D(1B)). Further, the agreement is not capable of being rectified because those requirements together comprise a jurisdictional fact. However, this confuses the requirement for an agreement to be a financial agreement with the requirement for a financial agreement to be binding.
Specifically what Mr Werner says is that “each of the constituent elements of a financial agreement (including the requirement imposed by s 90D(1)(b)) is … a jurisdictional fact”, and he referred us to the decision of the High Court of Australia in Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135). There the High Court said this (at 148):
Jurisdictional Facts
The term “jurisdictional fact” (which may be a complex of elements) is often used to identify that criterion the satisfaction of which enlivens the power of the decision-maker to exercise a discretion. Used here, it identifies a criterion, the satisfaction of which mandates a particular outcome …”
The “outcome” here is the ousting of the court’s power to make Part VIII orders to the extent that financial matters are dealt with in a financial agreement. However, the making of an agreement, and the making of an agreement that is a financial agreement does not oust the court’s power, and this is where the confusion arises. The criterion which mandates that outcome is that an agreement of this type is “binding” pursuant to s 90G.
Whilst it can be argued, as the wife does in effect, that the requirements of
s 90D are comprised of a “complex of elements” making up a “jurisdictional fact” I consider that reference to the structure of the provisions of the Act do not point to that conclusion. In short, I consider that there is a distinction between on the one hand, the formation, validity and enforceability of an agreement that is a financial agreement, to which contractual and equitable principles apply, and, on the other hand, the statutory precondition for making an agreement “binding” within the meaning of the Act.
If the language of “jurisdictional fact” is to be used, it is in my view properly referenced to the criterion applicable to whether a financial agreement is “binding” – that is, to s 90G alone.
Applying that reasoning here, I consider that the equitable doctrine of rectification (or other contractual or equitable remedies), can apply to the agreement and its formation, including whether it is a financial agreement as defined.
In my view, the “principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts …” (s 90KA) are applicable in deciding whether (a) there is an agreement and (b) the application of s 90B, s 90C and s 90D to that agreement. Thus, as an example, principles familiar to the law of contract relating to the sufficiency of a written note or memorandum emanating from Statute of Frauds requirements may well apply to the requirements of s 90B, s 90C or s 90D for a written agreement. Specifically I am of the view that the doctrine of rectification can apply, in circumstances when its requirements are made out, to the agreement and to the requirements of s 90B, s 90C and s 90D. Thus I consider that to this extent his Honour was in fact correct.
It is true that those sections can be said to be central to the question of whether a financial agreement as defined exists. However, that is no bar to the remedy; rectification is available “where the debate is whether a contract exists at all” (R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies, 4th ed. 2002 at [26-035] citing Sindel v Georgiou (1984) 154 CLR 661 and Heyward v Planet Projects Pty Ltd [2000] NSW SC 1105).
I now turn briefly to consider grounds 3 and 4 given that the wife’s counsel suggests that they “support ground 1”.
With ground 3, again counsel for the wife is confusing the requirements for there to be a financial agreement with the requirements for a financial agreement to be binding.
As previously set out, for there to be a financial agreement there must be an agreement, and to determine that, the principles of law and equity apply, and such an agreement is subject to equitable remedies such as rectification. This is reinforced by s 90KA, but noting again that that section refers to “financial agreements” as to distinct to “agreements”. However, that does not affect the force of the argument.
The relevance of this is that in applying the principles of rectification the intention of the parties is all important, (Pukallus v Cameron (1982) 180 CLR 447 per Brennan J at456; Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54; Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] 69 NSWLR 603 per Campbell JA at 660), and thus it was quite appropriate for his Honour to have regard to this, but only so far as his Honour was dealing with the
mis-description of the section pursuant to which the financial agreement was made (i.e. s 90C instead or s 90D).
In relation to ground 4 I do not consider that that ground shores up ground 1. The complaint raised there is that his Honour should have applied what is referred to as the strict compliance test supposedly emanating from the Full Court decision in Black and Black in determining whether the agreement was a financial agreement. As I will demonstrate shortly that is a test which again only has relevance to whether the financial agreement is binding pursuant to
s 90G and has no application to whether there is a financial agreement which is capable of rectification.
Thus, I find that there is no merit in grounds 1, 3, 4 or 7 to the extent that they complain that his Honour erred in relation to the mis-description of the section pursuant to which the financial agreement was made. However, as I discuss later in addressing ground 5 I do consider that his Honour erred in finding that the power to rectify lay, at least in part, in the Act as amended.
Grounds 2, 5 and 6
These grounds effectively challenge how his Honour viewed and applied the so called “strict compliance test” for which Black and Black is said to be authority.
Firstly, as to the test. In Black and Black the Full Court (Faulks DCJ, Kay and Penny JJ) said this at 82,343:
We are of the view that strict compliance with the statutory requirements is necessary to meet the courts’ jurisdiction to make adjustive orders under s 79.
In looking to the legislation and its requirements, we are cognisant of what was said by the High Court in Project Blue Sky Inc and Ors v Australian Broadcasting Authority (1998) 194 CLR 355 (per McHugh, Gummow, Kirby and Hayne JJ at 381):
The primary object of statutory construction is to construe the relevant provisions so that it is consistent with the language and purpose of all of the provisions of the statue. The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’. In Commissioner for Railways (NSW) v Agalianos Dixon CJ pointed out that ‘the context, the general purpose and policy of the provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’. Thus, the process of construction must always begin by examining the context of the provision being construed.”
In Black and Black the Full Court referred to what was said by O’Ryan J in Australian Securities and Investments Commission and Rich & Anor at paragraph 64 and described his Honour’s approach as “a less stringent approach to the interpretation of the requirements in section 90G”. O’Ryan J said this:
64.Section 90G sets out the requirements that must be met for a financial agreement to be binding upon the parties. All the requirements must be satisfied for the agreement to be binding. These requirements are justified because the effect of a valid agreement is to oust the jurisdiction of the court. However, there is no requirement of registration in the court or approval by the court of a financial agreement. Further, I am of the view that the requirements of s 90G are not stringent. All that is required is that the agreement is signed by both parties, include a statement addressing those matters in s 90G(1)(b) and attach a certificate from a legal practitioner.
The Full Court went on to contrast his Honour’s approach with that of Collier J in J and J (2006) FamCA 442, where his Honour said this:
19.To my mind, the words that appear in s 90G(1) ‘if an only if’, are words of real significance. They have a meaning. The import a requirement for a level of compliance, is the agreement is to be binding, that is clearly a standard or level above an beyond what might be described as substantial compliance. Those words ‘if and only if’ make it clear that each of the parties must ensure that that which is required to be contained and dealt with in the agreement and the annexures to it, it in fact contained, appropriately and completely. Compliance must therefore be a full compliance, satisfying the statutory requirements.
20.Something approaching full compliance, or something that if looked at in a less than strict light, might come close to establishing compliance, is not enough. Clearly the legislation intended that if this method of parties resolving their difficulties was to be used without any supervisory power of a court, then a situation where parties’ rights were to be affected, then that which was to be done had to be done fully in compliance with that which the statue set out and required.
With respect, I am by no means convinced that the distinction between the approaches of O’Ryan J and Collier J sought to be drawn by the Full Court in Black and Black is as sharp as there appears to be asserted. In my view, what each of Collier J, O’Ryan J and, indeed, the Full Court in Black and Black were anxious to point out is that it is only an agreement that can be plainly seen to comply with the mandatory statutory requirements applicable to a financial agreement that can exclude (in whole or in part) the operation of Part VIII of the Act.
O’Ryan J speaks of the need for “all of the requirements” of the Act to be met and that all such requirements “must be met”. The reference by his Honour to the requirements not being “stringent” is, in my view, consistent with “stringent” being used as a synonym of “onerous” or “rigorous”. The Full Court in Black and Black does indeed speak of “strict” compliance, as does Collier J in the passage earlier quoted, however, Collier J also continues in the paragraph earlier cited:
… compliance must therefore be a full compliance, satisfying the statutory requirements.
In the succeeding paragraph Collier J says:
Something approaching full compliance, or something that if looked at in a less than strict light, might come close to establishing compliance, is not enough. Clearly, the legislation intended that is this method of parties resolving their differences was to be used without any supervisory power of a court, in a situation where parties’ rights were to be effective, then that which was to be done had to be done fully in compliance with that which the statue set out and required.
I am of the view that the use of adjectives such as “strict” or “full” or “complete” as qualifiers to the word “compliance” merely seek to reinforce the fact that it is only a “financial agreement” as defined in the Act which is “binding” within the meaning of the Act, which can oust Part VIII. A financial agreement can only be binding if, and only if, each and all of the requirements of the Act to achieve that status are met. Compliance with each of the requirements must be met in order to achieve the agreement’s central purpose of operating in substitution for Part VIII because it is “if and only if” that that is done that the agreement is “binding”.
To attribute to the legislative requirements a “strict compliance test” or to qualify the necessary mandatory compliance, is to add a gloss to the requirements that is not required or justified by the legislation.
That said, the interrelationship between what is said to be the “strict compliance test” and the provisions of the Act in respect of the agreement as both an agreement and a financial agreement, can be seen in each of grounds 1 through 5. In paragraph 11 of the wife’s written submissions it is argued:
The ratio decidendi of Black v Black was not confined to the interpretation of s 90G(1)(b). The Full Court held ‘we are of the view that strict compliance with the statutory requirements is necessary to oust the jurisdiction of the court to make adjustive orders under s 79.’
There is nothing in the Full Court’s reasons which indicates that the reference to ‘statutory requirements’ was confined to s 90G. The Full Court’s reasoning applies as much to s 90D(1)(b) as it does to s 90G(1)(b). Subject to the recently enacted ss 90G(1A) and (1B), it applies to each and every pre-condition which s 71A specifies.
For the reasons previously set out, I do not accept that submission. I consider that a distinction is evident in the Act between the requirements of s 4 and ss 90B, 90C and 90D and the requirements to make financial agreements binding as prescribed in s 90G.
Indeed, I observe that the decision in Black and Black was confined to the interpretation of s 90G, and specifically s 90G(1)(b).
First, it should be noted that the omission in the agreement in Black and Black pertained to a specific s 90G requirement. In that context the Full Court emphasised as follows:
6.Whilst the grounds of appeal were voluminous it seems to us that the matter turns only on one issue which requires an interpretation of s 90G of the Family Law Act 1975 (Cth) … and the provisions of the agreement itself. (Emphasis added).
The Full Court also made it plain elsewhere in the reasons that the decision only pertained to one issue. For example the Full Court said as follows:
18.In his Notice of Appeal the husband set out a number of grounds of appeal. Whilst the Notice of Appeal sought to raise several issues, the oral argument focused on whether the financial agreement between the husband and the wife complied with the provisions of s 90G of the Act. As we propose to uphold the appeal on the ground that the agreement did not comply with those requirements we find it unnecessary to address all the grounds of appeal put forward by the husband. We comment however that the balance of the grounds appear to have little merit.
19.The husband asserted that the trial judge erred by rejecting the proposition that statutory requirements for financial agreements should be strictly construed. The husband contended that the Act:
· required his solicitor at the time he signed the final amended version of the financial agreement on or about 6 September 2002 to re-certify in accordance with s 90G(1)(c), which the solicitor failed to do despite making notes about the changes; and
· required the agreement to be in accordance with the wording then used in s 90G(1)(b);
…
47.The agreement between the husband and the wife did not contain a statement directly acknowledging that the husband, or for that matter the wife, received legal advice in relation to all the matters set out in s 90G(1)(b). The husband’s appeal is therefore allowed … (Emphasis added).
Further, nothing in the Full Court’s decision in that case suggests that the distinction drawn by me between the requirements for an agreement to be a financial agreement and those which are needed to make any such agreement “binding” cannot, or should not, be drawn. I do not consider any part of these reasons to be inconsistent with what the Full Court said in Black and Black. Nor do I consider that my previous discussion of the “strict compliance test” is at odds with that decision.
To return to this case, I confirm my view that it was open to his Honour to rectify the agreement so as to correct the references to s 90C by replacing them with references to s 90D, although I consider that his Honour erred in finding that the power to do so lay at least in part in the recent amendments to the Act.
Accordingly, I reject the contentions in grounds 2, 5 and 6 insofar as they are directed to the result arrived at by the trial judge which correct the
s 90C/s 90D error. I also reject the contention evident at least in grounds 2 and 5 (and ground 1 as well for that matter) that his Honour erred in finding that the agreement in this case was a financial agreement. The agreement was clearly an agreement, and once the s 90C/s 90D error was rectified it was a financial agreement as defined.
Further, in relation to ground 5, his Honour’s approach can be seen from paragraph 85 of the reasons for judgment where, to repeat, his Honour said this:
85.Whilst it was a very different issue that was before the Full Court in Black & Black and which then led to the legislative amendments to the Act the principle however was the intent and actions of the Parliament to somewhat limit the strict compliance test. The concern of Government was to avoid the consequence of technical errors and thus the Act was amended so as to ensure that people who have made an informed and common decision to enter into a binding financial agreement cannot later avoid, or have the binding nature of such an agreement, dismissed on a mere technicality. What is a mere technicality is not defined by the Parliament or the amending legislation and that issue has been the subject of my deliberations in this matter. I have concluded that each of the five errors in the agreements, whilst legally substantial are of a technical nature that can and should be rectified.
Thus, the trial judge applied the recent amendments to the Act in aid of rectifying the agreement with respect to the errors referenced to s 90C. In my view, that is an error on his Honour’s part. The power to rectify the agreement does not derive from the recent amendments to the Act (which amended s 90G but left untouched s 4, s 71A and ss 90B, 90C and 90D). Rather, the power to rectify derives from equity and a financial agreement being no different in that respect from any other agreement.
However, this error does not affect his Honour’s ultimate decision in relation to the s 90C/s 90D error. For the reasons that I have identified I consider that it was open to his Honour to rectify the agreement so as to remove the erroneous references to s 90C and to substitute correct references to s 90D. Thus, there is no merit in ground 5 to this extent, but as I demonstrate when addressing grounds 8 and 9, his Honour did err in finding that, at least in part, the recent amendments to the Act allowed him to rectify the error in the certificates.
Finally, with ground 6, I agree with the submissions of counsel for the wife that to the extent that his Honour relied on extrinsic material to the legislation to determine the meaning of ss 4, and 90D, his Honour erred. That is because the amending legislation did not in any way affect those provisions, either directly or indirectly. Thus, there is merit in this ground of appeal.
Grounds 8 and 9
The certificates of the legal practitioners as they appear in the agreement are as follows:
I, [Wife’s Solicitor] of … Victoria, being a Solicitor holding a current practicing certificate pursuant to the Legal Profession Act 2004 (Victoria) hereby certify that before she signed this deed I advised [Ms Senior] of:
1.The fact that I am a duly qualified legal practitioner holding a current practising certificate to the Legal Profession Act 2004 (Vic).
2. The effect of this agreement on Patricia’s rights.
3.The advantages and disadvantages, at the time that the advice was provided, to Patricia of making the agreement.
…
I, [Husband’s Solicitor] of … Victoria, 3000, Solicitor holding a current practicing certificate pursuant to the Legal Profession Act 2004 (Victoria) hereby certify that before he signed this deed I advised [Mr Anderson] of:
1.The fact that I am a duly qualified legal practitioner holding a current practising certificate to the Legal Profession Act 2004 (Vic).
2. The effect of this agreement on Chris’s rights.
3.The advantages and disadvantages, at the time that the advice was provided, to Chris of making the agreement.
It is clear that the trial judge made no distinction between the errors in the certificates and the errors in referring to s 90C instead of s 90D. His Honour held that all of these errors could be rectified, and that this could be achieved by application of the Act as amended.
However, as I have said, there is a clear distinction between agreements which are financial agreements (ss 4, 90B, 90C, 90D) and those financial agreements which are binding (s 90G), and the recent amendments to the Act do not have any effect on that distinction.
I do not consider that rectification is available to a court so as to “correct” non-compliance with any or all of the requirements of s 90G. Those requirements do not pertain to matters of agreement as between the parties in respect of which clear intention can sound in rectification.
Rather, I agree with the submissions of the wife that those requirements are in the nature of a jurisdictional fact, compliance with which determines whether or not the court has power to make orders pursuant to Part VIII of the Act. Those requirements are in a quite distinct category from those which pertain to the formation or validity of an agreement as a financial agreement.
Accordingly, I consider that the trial judge erred in purporting to rectify deficiencies in the requirements of s 90G (in this case, the content of the solicitor’s certificates). I also agree with the submission of the wife that the trial judge erred in finding that those errors “were not fatal to the binding nature of the agreement”.
The relevant requirement of s 90G here is the provision of advice to a “spouse party” and certification to that effect. Compliance with that provision, and all other provisions of s 90G is mandatory. That compliance is the foundation for the ouster of the powers of the court to make Part VIII orders. I agree with what was said in Black and Black that the use of the words “if and only if” in s 90G and the fact that the powers of the court are being removed, requires the court to scrutinise carefully whether s 90G has been complied with.
It is clear to me that the certification must, on its face, comply with the terms of the section. A court could not be satisfied of that requirement in circumstances where, as here, the certificate refers to the provision of advice to a person named as “A” but, thereafter, refers to advice being provided to a person named “B”
Underpinning his Honour’s application of the Act appears to be the assumption that it serves to “cure” relevant errors so as to make the agreement binding when otherwise those errors would have been fatal to that. I disagree. The amendments to the Act do not permit rectification of error in the requirements of s 90G(1) in the way that there can be rectification of error in an agreement according to the principles of law and equity. Rather, the amendments permit the application of s 90(1A) where certain conditions are satisfied, such as:
(a)one or more or the requirements of s 90G(1) are not satisfied; and
(b)the court is satisfied that it would be unjust and inequitable if the agreement was not binding.
Further, the remedy is not rectification, but rather the remedy is statutory. In other words, an agreement becomes “binding” despite its deficiencies.
Thus I find merit in these grounds of appeal.
Ground 10
This is discrete ground of appeal.
The requirement of s 90G(1)(b), which refers to advice as to “the advantages and disadvantages” of the agreement for each party is not directed towards whether any such advice as was provided was correct or not. Here, a specific assertion is made by a solicitor that he could not see any advantages for this client in her entering the agreement and thus he did not discuss this with her. In those circumstances, whatever be the merits or otherwise of that advice, it is in my view illogical to read s 90G(1)(b) such that it requires a legal practitioner to advise of “advantages” in circumstances where the application of appropriate professional skill and care in and about the provision of that advice sees none.
In order to avoid illogicality in its interpretation, the reference to providing legal advice “about the advantages and disadvantages” of the agreement should be read as meaning “providing such advantages, if any, and such disadvantages, if any, as are apparent to the legal practitioner providing the advice”.
Thus I find no merit in this ground of appeal.
Ground 11
The complaint is that there was no evidence capable of supporting the finding. However, by reference to the principles and the authorities earlier discussed, no such specific evidence was needed if either the plain wording of the document itself was redolent of an error or if there was evidence that the common intention of the parties is clear but is not reflected in the terms of the agreement.
Here, I consider that his Honour was correct in finding that there was a clear common intention that the parties intended to enter upon a financial agreement and for it to bring an end to financial claims against each other arising out of their marriage. His Honour was also correct in finding that so much is clear from the terms of the agreement itself. For example, the agreement makes plain that the parties intended “to reach a final property settlement” and to “record same in a financial agreement”. The Recitals reflect the fact of the parties’ divorce. The agreements’ operative provisions make it clear that the parties intended to enter into a financial agreement pursuant to Part VIII of the Act (clause 1), the parties intended by the agreement to define rights and obligations with regard to “property division and financial matters”, they were to be “in substitution for the legal and equitable rights and entitlements of each party under the Family Law Act 1975 …” (clause 17), it was the intention for the agreement to operate as a bar to further proceedings (clause 23), and it was intended to “define and bring to an end the financial relationship between parties who were once married” (clause 24).
Thus, again I find no merit in this ground.
Conclusion
The appeal should be allowed. I have found merit in the appeal insofar as it challenges the rectification by the trial judge of the errors in the certificates of independent legal advice. I consider that these errors are not capable of rectification and subject to s 90G(1A) and (1B) of the Act the financial agreement is not binding under s 90G(1), and cannot oust the jurisdiction of the court pursuant to s 79 of the Act. I have also found that his Honour erred as alleged in ground 6 of the Notice of Appeal, but that error is inconsequential when compared with the error to which I have just adverted.
The question then becomes can we exercise the discretion reposed in the court by s 90G(1A) and (1B) to declare the financial agreement binding notwithstanding non-compliance with s 90G(1) of the Act, or must we remit the matter to the trial judge.
Although we heard limited argument from the wife’s counsel as to whether we could be “satisfied that it would be unjust and inequitable if the agreement were not binding”, I consider it necessary to remit the matter to Young J for determination of that issue. In my view, as I said in Parker & Parker [2010] FamCA 664, is it unclear precisely what this means and what evidence may be required for the Court to be satisfied. In other words, does s 90G(1A)(c) require the Court to consider the efficacy of the settlement and the entitlements that the parties are to receive pursuant to the agreement or does it simply invite the Court to refer back to the nature of the complaint. In Parker I expressed the view that s 90G(1A)(c) contemplates the Court looking at the nature of the non-compliance with s 90G(1) and determining whether, in the circumstances, it would be unjust and inequitable if the agreement was not binding on the parties due to the failure to comply with a “technical requirement”.
In any event, these are not matters on which we heard any argument and therefore in my view it is not possible for us to exercise the discretion.
In terms of remitting the matter, it is appropriate that Young J rehears the same because of his intimate knowledge of the case, and there is nothing that would prevent him from doing so. Indeed, that is an alternative order sought by the wife.
Costs
At the hearing of the appeal both parties sought that if the appeal was successful then they each have costs certificates for the appeal and for the rehearing. I have found error by the trial judge on questions of law, and thus it is appropriate for both parties to have costs certificates. They should also have certificates in relation to the rehearing before Young J, but only insofar as that rehearing determines whether the agreement should be declared binding pursuant to s 90G(1A) and (1B).
Murphy J
I have had the advantage of reading the reasons prepared in draft form by Strickland J.
I agree that the appeal ought be allowed for the reasons set out by his Honour. I also agree specifically with what his Honour says about the distinction between financial agreements as agreements and the requirements of s 90G, and with what his Honour says about the so-called “strict compliance test”.
I respectfully differ from his Honour in only one respect, namely the view expressed at paragraph 91 of his Honour’s reasons as to the relevance of a consideration of the transitional provisions of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) (“the Amending Act”) to the determination of this appeal.
Ground 9 refers to asserted errors in the trial judge’s finding that errors in the certificates to the agreements were not “fatal to the binding nature of the agreement” and goes on to assert, in sub-paragraph (b) that his Honour should have found that “the Agreement was not binding within the meaning of s 71A and s 90G of the Act”. The “binding nature of the agreement” is determined by s 90G. The correct interpretation of, and application of, that section is, in my view, central to the determination of this ground.
The trial judge referred to the “recently amended” s 90G (at [59]) and held, with respect correctly, that the Amending Act’s amendments “… were included in the Act with operation from 4 January 2010, but with retrospective effect covering 27 July 2009 [ie the date of the agreement]” (at [60]). In dealing further with those amendments, his Honour held:
[79]The decision of Black & Black (supra) led to the introduction of the [Amending Act]. The effect of the Amending Act upon Part VIIIA was by Schedule 5 which amended s 90G in the manner which I have hereafter discussed. It was submitted by Counsel for the wife that regardless of the amendments that “Black v Black is still good law, at least with respect to non-compliance with section 90G(1)”. That submission did not extend to s 90KA. [italics in the trial judge’s reasons]
…
[84]Schedule 5 became operative on 4 January 2010. There is a transition provision provided for in Item 8 of that Schedule so that the legislative amendments have retrospective operation to all agreements made on or after 27 December 2000 and thus catch the agreement executed by these parties on 27 July 2009.
At paragraph 59 of the trial judge’s reasons his Honour quotes (correctly) s 90G in its then-enacted form. His Honour then applies the section in that form in his Honour’s analysis of the arguments with respect to rectification of the agreement. But, in my view, the submission made by the wife’s counsel (quoted by his Honour at [79], above) depends for its resolution upon the terms of s 90G as they apply to this agreement. It was, and is, not possible to correctly determine that question, without considering s 90G in its retrospectively-amended form.
The reference by the trial judge to Item 8 (at [84], quoted above) is, with respect, correct as far as it goes. However, it is, with respect, incorrect in so far as it refers solely to Item 8 in giving retrospective operation to Schedule 5. While, Item 8 of Schedule 5 to the Amending Act applies to “all agreements made on or after 27 December 2000”, the true picture is complicated by the fact that Schedule 5 to the Amending Act also includes Item 8A which gives additional retrospective effect to s 90G.
As will be seen, I respectfully agree with Strickland J that, consequent upon the orders on which his Honour and I agree, the matter should be remitted, and remitted to Young J. I consider that this factor also renders important the exposition of what I respectfully consider to be the correct effect of the retrospective operation of the Amending Act on the instant agreement.
In that regard, I am also conscious of the fact that the intricacies of the Amending Act’s retrospective operation have caused significant argument in other cases (see e.g. Woolley & Spagnol(No 2) [2010] FamCA 1099) and that the appellant’s counsel submits, I think correctly, that guidance from this Court would helpful to the profession and parties to financial agreements. Brennan J held (in a slightly different context):
…The duty and the jurisdiction of the courts are expressed in the memorable words of Marshall CJ in Marbury v Madison … ‘It is emphatically, the province and duty of the judicial department to say what the law is’.
[Attorney-General (NSW) v Quin (1990) 170 CLR 1, 35]
Amendments to the Act
Section 90G was introduced into the Act by the Family Law Amendment Act 2000 (Cth) which commenced operation on 27 December 2000. That legislation introduced “financial agreements” to the Act and enacted s 71A, the definition of “financial agreement” in s 4 and, inter alia, s 90B, s 90C, and s 90D.
The Family Law Amendment Act 2003 (Cth) amended s 90G. Those amendments had effect from 14 January 2004. As a result, a new s 90G(1)(b)(ii) was inserted. Section 90G initially provided ((1)(b)) for four specific matters upon which independent legal advice needed to be provided by a legal practitioner and certified in an annexure to the agreement. The amendments reduced those four matters to two.
Initially the section required the legal practitioner to provide advice as to, and to certify, “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”. The amendment changed that sub-paragraph to read “the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement”.
Notably, the 2003 amending Act retained s 90G’s requirements for a statement about the advice to be contained within the agreement and the requirement that a certificate signed by the provider of the advice be annexed to the agreement.
Subsequent amendments to that section were made by the Amending Act with effect from 4 January 2010. Section 90G was further amended.
The agreement in this case was made on 27 July 2009. That is, the agreement was made at a time when the requirements of s 90G were those as amended by the 2003 amending Act. However, at the trial of this matter (on 10 May 2010), the Amending Act had come into effect. But, the Amending Act applies to agreements made prior to its commencement. The result is that the Amending Act impacts upon the terms of s 90G that were applicable at the trial of this matter.
The Amending Act’s Retrospective Effect
I agree with what Strickland J says at [94] of his Honour’s reasons with respect to the use of extrinsic materials. However, in the different context under discussion, I do not consider that the wording of the Amending Act is plain and unambiguous – at least to the extent that retrospective effect is given to it. Indeed, I consider that the inter-relationship between Item 8 and Item 8A of Schedule 5 gives rise to ambiguity and considerable difficulties in interpretation – both in respect of those Items and, as a result, s 90G. The plain meaning of those legislative expressions is not clear from the wording of the Act.
I consider it necessary, then, to refer to both the Explanatory Memorandum and the second reading speech pertaining to the Amending Act. (See s 15AB Acts Interpretation Act 1901 (Cth); Newcastle City Council v GIO General Ltd (1997) 191 CLR 85, 113.) In addition, I consider it appropriate and important to examine the underlying object or purpose of the Amending Act so as to assist in ascertaining its meaning. (See s 15AA Acts Interpretation Act 1901 (Cth).)
I should first observe that Item 8A of Schedule 5 was not part of the Amending Legislation when the Bill was introduced into the House of Representatives. It was inserted subsequently as a result of debate in the Senate. Item 8A, then, despite the numbering perhaps indicating on its face a subsequent amendment to Schedule 5, was in fact part of the Amending Act as passed.
The Explanatory Memorandum, extracts from the second reading speech of the Attorney-General dated 3 December 2008 upon introduction of the Bill, and an extract from the closing debate in the Senate upon the second reading of the Bill, were each referred to in the trial judge’s reasons. It is convenient to repeat them in that form:
[81]Counsel for the husband first identified that the intention of Parliament in enacting the amending legislation was primarily “to overcome the effect of the Full Court’s decision in Black & Black”.Secondly and in the second reading speech of the Attorney-General, dated 3 December 2008, and when introducing the amended legislation in Parliament, it was said that:
“Importantly, the bill responds to the decision of the full court of the Family Court of Australia in the matter of Black and Black.
In that case, the court found that a binding financial agreement (commonly known as a pre-nuptial agreement) made under the Family Law Act 1975 was invalid because it did not strictly comply with certain technical requirements set out in the Family Law Act.
The amendments are being made because the government is concerned about the possible consequences of that decision on the validity of existing binding financial agreements which may contain technical errors.
The bill amends the Family Law Act to ensure that people who have made an informed decision to enter into one of these agreements cannot later avoid or get out of the agreement on a mere technicality, resulting in court battles that the agreement was designed to prevent. These amendments will restore confidence and certainty in the binding nature and enforceability of financial and termination agreements under the Family Law Act”. [italics and emphasis in the trial judge’s reasons]
[82]Counsel for the husband identified … the commentary of Senator Carr, 26 October 2009, in closing debate in the Senate upon the Second Reading of the Bill where it was said that:
“The Bill responds to the decision of the Full Court of the Family Court of Australia in Black v Black. The Bill amended the Family Law Act to limit the technical requirements that people need to meet to enter into one of these agreements while still providing necessary protections to parties – such as a requirement to get legal advice. It will restore confidence in the binding nature and enforceability of financial and termination agreements under the Family Law Act”. [italics and emphasis in the trial judge’s reasons]
[83]Similar sentiments are recorded in the Explanatory Memoranda for the Bill …:
“Schedule 5 to the Bill amends the binding financial agreements and termination agreements pursuant to the provisions of the Family Law Act 1975 to relax certain technical requirements that must be strictly satisfied for financial agreements and termination agreements to be binding. These amendments will respond to the concerns about binding financial agreement provisions of the Act that have arisen following the decision of the Full Court of the Family Court in Black v Black. The Family Law Council has confirmed that amendments are required to restore confidence in the binding nature of these agreements”. [italics and emphasis in the trial judge’s reasons]
Item 8 to Schedule 5 of the Amending Act provides relevantly:
8 Application
(1)The amendments made by items 1A to 7A apply in relation to financial agreements, and termination agreements, made on or after 27 December 2000.
…
(4)For a financial agreement made before 14 January 2004, paragraph 90G(1)(b) of the Family Law Act 1975, as inserted by item 2 of this Schedule, does not apply and the following paragraph 90G(1)(b) of that Act is taken to have been inserted by that item and to apply instead:
(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 that 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 the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable;
…
(6)For a financial agreement made before the commencement of this item, paragraphs 90G(1)(c) and (ca) of the Family Law Act 1975, as inserted by item 2 of this Schedule, do not apply.
(7)For a financial agreement made before the commencement of this item, paragraph 90G(1A)(b) of the Family Law Act 1975, as inserted by item 4A of this Schedule, does not apply and the following paragraph 90G(1A)(b) of that Act is taken to have been inserted by that Item and to apply instead:
(b)paragraph (1)(b) is not satisfied in relation to the agreement; and …
It can be seen that, by Item 8(1), amendments made by the Amending Act apply in relation to “[all] financial agreements … made on or after 27 December 2000”. That retrospective application would, on its own, provide a foundation for numerous actions that would seek to “cure” non-compliance with the mandatory requirements of s 90G in respect of all financial agreements made pursuant to the Act. In order to prevent that occurring, the broad retrospective application provided for in Item 8(1) is qualified by the succeeding sub-parts.
Item 8 of the Amending Act can be summarised as follows:
·It applies to all agreements made after the introduction of Part VIIIA and before the commencement of the Amending Act;
·It excludes from the retrospective operation of the Amending Act, agreements that have either been set aside by a court (8(2)) or cases where financial orders have been made by a court by reason of a finding that an agreement is not binding (8(3));
·It renders inapplicable the new (i.e. 2010) s 90G(1)(b), and, instead, introduces a paragraph (1)(b) which is effectively identical to that which applied before the 2004 amendments. The effect is to prevent arguments that an agreement is not binding because the 2010 s 90G(1)(b) has not been complied with and to ensure that those agreements which complied with s 90G’s pre-2004 requirements remain binding;
·It renders inapplicable s 90G(1)(c) and (ca) of the 2010 s 90G (Item 8(6));
·It renders inapplicable s 90G(1A)(b) of the 2010 s 90G (Item 8)(7));
·It inserts, in lieu, an alternate s 90G(1A)(b) (Item 8)(7));
·The effect of Items 8(6) and 8(7) is to permit a financial agreement made prior to the Amending Act’s commencement (ie 4 January 2010) to be binding by virtue of the (retrospective) operation of s 90G(1A), but only if the paragraph (b) inserted by Item 8(4) (i.e., in effect, the pre-2004 s 90G) has not been complied with.
Similar purposes to those just described can be seen to lie behind Item 8A.
The Supplementary Explanatory Memorandum to the Federal Justice System Amendment (Efficiency Measures) Bill (No. 1) 2008 (Cth) circulated by the Attorney-General provides:
22.The amendment inserts new item 8A into Part 1 of Schedule 5 to the Bill which will provide for additional circumstances in which a financial and termination agreement made on or after 14 January 2004 and before commencement of item 8A will bind the parties to the agreement. Amendments to the Family Law Act 1975 which commenced on that date changed the matters about which spouses had to obtain prior independent legal advice for the agreement to bind them. Some legal practitioners continued to rely on old precedents relating to the provisions of the Act as they stood before 14 January 2004 for agreements made for some time after that date. Subitems 8A(2), 8A(3), 8A(5), 8A(6) will provide that the agreement binds the spouses if the prior independent legal advice obtained by one or both spouses was about matters on which advice was required under the Act to be obtained before 14 January 2004. Sub-item 8A(7) provides that Amendment 11 does not apply to agreements set aside before the commencement of item 8A. Accordingly, it does not give rise to the acquisition of any property rights.
The reference to Item 8A’s application to paragraph 90G(1)(b) of the Act “as in force during that period” would appear to be a reference to s 90G(1)(b) as it appeared in the Act in the period 14 January 2004 to 3 January 2010. That paragraph provided at that time:
(1)A financial agreement is binding on the parties to the agreement if, and only if:
…
(b)The agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii)the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
…
But, rather than render inapplicable that paragraph (as did Item 8(4) in respect of the 2000 version of it), the paragraph provides for a paragraph contained within Item 8A(2) to “also” apply:
(2)Paragraph 90G(1)(b) of the Family Law Act 1975, as in force during that period, is also taken to be satisfied in relation to a spouse in relation to the agreement if, before signing the agreement, the spouse party was provided with independent legal advice from a legal practitioner about:
(a) the effect of the agreement on the rights of that party; and
(b)whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
(c)whether or not, at that time, it was prudent for that party to make the agreement; and
(d)whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
In addition to the use of the word “also” in Item 8A(2), the use of the word “additional” in the extract from the Supplementary Explanatory Memorandum above, should also be noted.
A further interpretive difficulty is seen by comparing Item 8(6) with Item 8A(3) and recalling that the former applies to all agreements made after the introduction of Part VIIIA in 2000 and before 4 January 2010 and the latter to agreements made after 14 January 2004 and before 4 January 2010:
8(6)For a financial agreement made before the commencement of this item, paragraphs 90G(1)(c) and (ca) of the Family Law Act 1975, as inserted by item 2 of this Schedule, do not apply.
8A(3)Paragraph 90G(1)(c) of the Family Law Act 1975, as inserted by this Act, applies in relation to the agreement as if the reference in that paragraph to the advice referred to in paragraph (b) included a reference to the advice referred to in subitem (2) of this item.
It can be seen, then, that Item 8 renders inapplicable (1)(c) and (ca) of the 2010 s 90G. But, Item 8A(3) renders paragraph (1)(c) applicable in respect of agreements made post 14 January 2004 and before 4 January 2010. Thus, in respect of agreements made during that time, the effect of Item 8A(2) and (3) would appear to make s 90G(1A) applicable to agreements that comply with a form of s 90G that:
·Includes paragraph 1(b) as the section stood after 14 January 2004, but before the Amending Act; and
·Includes, as an addition, paragraph 1(b) in terms of the paragraph contained in Item 8A(2); and
·Includes paragraph 1(c) of the 2010 s 90G (but not (ca) of the 2010 s 90G).
Item 8A does not contain a provision similar to Item 8(6). Thus, s 90G(1A) (as inserted by the Amending Act) applies to agreements which satisfy paragraphs (1)(a), (b) or (c) of the 2010 s 90G and to agreements which satisfy Item 8(2).
The issues just discussed found expression in a submission by Mr Werner, counsel for the appellant, as to the net effect of those amendments, insofar as they applied to the agreement in this case (being an agreement made after 14 January 2004 and before 4 January 2010).
That submission was expressed in the form of a “consolidated” s 90G contained in an aide memoire provided by counsel. Counsel for the respondent made no submissions challenging the correctness of the section so expressed. The relevant parts of the section, as “consolidated” by counsel is expressed as follows:
90G When financial agreements are binding
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement;
OR
before signing the agreement, the 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 the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in the italicised text or, in the alternative, stating that the advice referred to in the underlined text in paragraph (b) above, was provided to that party (whether or not the statement is annexed to the agreement); and … (footnotes omitted)
I agree that this is the effect (relevantly) of the amendments.
As a result, I agree that that part of s 90G, as there expressed, provided the relevant mandatory requirements by which the trial judge was bound to decide if this particular financial agreement was binding. His Honour did not apply s 90G in that form and, in so doing, was, in my respectful view, in error.
Remission to Young J
As I have earlier said, I respectfully agree with Strickland J that, as a consequence of the orders upon which we agree, the matter be remitted and that it be remitted to Young J. I also agree that questions yet to be determined arise with respect to the meaning of s 90G(1A)(c). In the absence of substantive argument, I would prefer to express no view on that issue.
I certify that the preceding one hundred and ninety two (192) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Strickland & Murphy JJ) delivered on 14 June 2011.
Associate:
Date: 14 June 2011
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