Talley & Patterson
[2022] FedCFamC2F 1203
•5 September 2022
Federal Circuit and Family Court of Australia
(DIVISION 2)
Talley & Patterson [2022] FedCFamC2F 1203
File number(s): SYC 4240 of 2019 Judgment of: JUDGE MORLEY Date of judgment: 5 September 2022 Catchwords: FAMILY LAW – Part VIIIAB Division 4 Agreement – Financial Agreement binding on the parties – whether agreement binding on the parties pursuant to section 90UJ – Wife alleges she did not receive legal advice as required by section 90UJ(1)(c) – detailed exploration of the evidence on the matter including transcript – credit finding as to the Wife’s evidence – Court finds that the Wife did receive the requisite advice – agreement prima facie binding on the parties.
FAMILY LAW – Part VIIIAB Division 4 Agreement – Financial Agreement binding on the parties – whether agreement should be set aside pursuant to section 90UM(1)(e) – whether agreement void for uncertainty – agreement not uncertain.
FAMILY LAW – Part VIIIAB Division 4 Agreement – Financial Agreement binding on the parties – whether agreement should be set aside pursuant to section 90UM(1)(a) – whether agreement obtained by fraud – agreement not obtained by fraud.
FAMILY LAW – Part VIIIAB Division 4 Agreement – Financial Agreement binding on the parties – application by Husband for enforcement of agreement – where no evidence of separation declaration pursuant to section 90UF – agreement not currently enforceable.
Legislation: Evidence Act 1995 (Cth) s 122
Family Law Act 1975 (Cth) ss 90SM, 90UC, 90UE, 90UF, 90UG, 90UJ, 90UM, 90UN.
Judiciary Act 1903 (Cth) s 31.
Cases cited: ABC v Australian Performing Rights Association Inc (1973) 129 CLR 99
Axelsen v O’Brien (1949) 80 CLR 219
Beroni & Corelli [2021] FamCAFC 9
Bilal & Omar [2015] FamCAFC 30
BridgeWholesale Acceptance Corp (Australia) Ltd v Burnard (1992) 27 NSWLR 415
Dobbs & Dobbs [2021] FamCAFC 78
Frederick & Frederick [2019] FamCAFC 87
Grainger & Bloomfield and Anor [2015] FamCAFC 221
Hoult & Hoult [2011] FamCA 1023
Hoult & Hoult [2013] FamCAFC 109
Jones v Dunkel (1959) 101 CLR 298
Lincoln (deceased) & Moore [2016] FamCA 547
Logan & Logan [2013] FamCAFC 151
Mann v Carnell [1999] HCA 66
Meehan v Jones (1982) 149 CLR 571
Nyles v Nyles [2011] FamCA 565
TheAustralian Guarantee Corporation Ltd v Balding (1930) 43 CLR 140
Trustees Executors and Agency Company Ltd & Anor v Peters (1960) 102 CLR 537
Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429
Wallace & Stelzer and Anor [2013] FamCAFC 199
Warner & Cummings [2017] FCCA 432
WN Hillas & Co Ltd v Arcos [1932] UKHL 2
Division: Division 2 Family Law Number of paragraphs: 174 Date of hearing: 14 May 2021 Place: Sydney Counsel for the Applicant: Mr Moutasallem Solicitor for the Applicant: Darby Jones Lawyers Counsel for the Respondent: Mr Flaherty Solicitor for the Respondent: Mullick & Associates ORDERS
SYC 4240 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS TALLEY
Applicant
AND: MR PATTERSON
Respondent
order made by:
JUDGE MORLEY
DATE OF ORDER:
5 September 2022
THE COURT DECLARES THAT:
1.The Financial Agreement entered into by the parties dated 18 April 2016 is a Part VIIIAB Financial Agreement pursuant to section 90UC of the Family Law Act 1975 (Cth) and is binding on the parties.
THE COURT ORDERS THAT:
2.The Initiating Application filed on 1 July 2019 and the Response filed on 13 September 2019 (‘the moving documents’) are dismissed save for any application for costs.
Costs applications
3.Should either party seek to press the costs application contained in their moving document, that party is to file and serve:
(a)A minute of order setting out the quantum of costs sought (including the basis for that quantum);
(b)Any affidavit/s or evidence in support of the application; and
(c)Written submissions in support of the costs application,
by no later than 4:00PM on 3 October 2022.
4.Any written submissions in reply to any costs application are to be filed and served by no later than 4:00PM on 17 October 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Talley & Patterson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MORLEY:
Introduction
These are proceedings consequent upon the breakdown of the De Facto relationship between the Applicant De Facto Wife, Ms Talley (‘the Wife’) and the Respondent De Facto Husband, Mr Patterson concerning a Part VIIIAB financial agreement between the parties made during the currency of the de facto relationship under section 90UC of the Family Law Act 1975 (‘the Act’), dated 18 April 2016 (‘the Financial Agreement’).
The Wife’s case is that the Financial Agreement is not binding on the parties because:
(1)She did not receive the advice required by section 90UJ(1)(b) from a legal practitioner about the effect of the agreement on her rights and about the advantages and disadvantages, at the time that the advice should have been provided to her, of making the agreement; or, in the alternative,
(2)The Financial Agreement should be set aside as being void for uncertainty under section 90UM(1)(e).
As I will indicate shortly, the Wife’s case was not stated in that manner, but it was clear to both parties at the hearing that the foregoing is what the Wife was actually seeking.
In written submissions contained in the outline of case document filed prior to the hearing, it was indicated that the Wife also relied upon section 90UM(1)(a) in asserting that the Financial Agreement should be set aside as having been obtained by fraud by reason of a the non-disclosure of a material matter by the Husband at the time the Financial Agreement was entered into. Once again, no specific order was sought to that effect, but it was clear to both parties at the hearing that the foregoing is what the Wife was also seeking.
In the event that the Wife is successful on either limb of her (intended) application, and the Financial Agreement is either not binding on the parties or is set aside as being void for uncertainty, she sought that the court exercise jurisdiction under section 90SM and make an order adjusting property between the parties. Once again, the Wife’s case was not stated in that manner, but it was clear to both parties at the hearing that the foregoing is what the Wife is actually seeking.
The Husband’s case is that:
(1)The Wife did receive the requisite advice from the legal practitioner under section 90UJ(1)(b) and that in all respects the Financial Agreement is binding upon the parties; or, in the alternative, if the Husband was not successful in satisfying the court that the Wife had received the requisite advice,
(2)The Court should find that nevertheless it would be unjust and inequitable if the agreement were not binding on the parties (section 90UJ(1A)) and so make a declaration to that effect under section 90UJ(1B).
The Husband sought enforcement of the terms of the Financial Agreement.
The proceedings
The proceedings were commenced by the Wife filing her Initiating Application on 1 July 2019 together with her affidavit of 18 June 2019 in support and her Financial Statement of 18 June 2019.
The Husband responded by filing his Response on 13 September 2019 together with his affidavit and Financial Statement, both of 12 September 2019.
At the first return date on 16 September 2019 before Registrar Campbell (now his Honour Judge Campbell of this court) the issues were identified and noted and the matter was referred my docket for call over. On 19 June 2020 I may trial directions and listed the matter for a compliance check, at which the matter was set down for hearing of the validity issue on 14 May 2021.
The hearing proceeded on 14 May 2021.
The Wife was represented by Mr Moutasallem of Counsel and Husband was represented by Mr Flaherty of Counsel.
Judgment was reserved and I apologise profoundly to the parties and their legal representatives for the inordinate delay in providing these Reasons and making final orders.
The material relied upon at hearing
The Wife relied upon the following material:
(1)Her Initiating Application filed 1 July 2019;
(2)Her affidavit affirmed 18 June 2019 and filed 1 July 2019, and containing as purported annexure “A” (there was no annexure note signed by the witness to the affidavit) a copy of the Financial Agreement;
(3)Her Financial Statement of the Wife sworn or affirmed 18 June 2019 and filed 1 July 2019; and
(4)Outline of Submissions of Applicant prepared by Mr Moutasallem and filed 12 May 2021.
The Wife also relied upon the following exhibits:
(1)Exhibit A1 – all of the documents produced on subpoena by E Lawyers; and
(2)Exhibit A2 – a letter dated 5 May 2021 from Darby Jones Lawyers (solicitors for the Wife) to Mullick & Associates (solicitors for the Husband), and a letter dated 6 May 2021 from Mullick & Associates to Darby Jones Lawyers.
The Husband relied upon the following documents:
(1)His Response to Application for Final Orders filed 13 September 2019;
(2)His affidavit sworn 12 September 2019 and filed 14 September 2019
(3)Financial Statement of the Husband sworn or affirmed 12 September 2019 and filed 14 September 2019; and
(4)The Respondent’s Case Outline prepared by Mr Flaherty and filed 6 May 2021.
The Wife was cross examined by Mr Flaherty for the Husband and re-examined by Mr Moutasallem.
The Husband was cross examined by Mr Moutasallem and briefly re-examined by Mr Flaherty.
Both counsel made oral submissions after the close of the evidence and both relied upon the written submissions contained in their outline document.
The orders sought by the parties
The orders sought by the Wife were set out in her Initiating Application, are as follows:
(1)An order pursuant to section 90UM(5) of the Act that the Binding Financial Agreement dated 18 April 2016 be set aside.
(2)An [sic] declaration that the Binding Financial Agreement be declared void for uncertainty.
(3)An order pursuant to section 90UM(6) of the Act for a financial adjustment in favour of the Applicant, by way of a transfer of the B Street, Suburb C property to the Applicant, or such other proportion that is determined to be just and equitable by the Court.
(4)Costs.
(5)Any further or such order Court deems fit.
A few comments on the orders sought by the Wife are necessary, as paragraph 2 to 4 of these Reasons will have foreshadowed.
The reference to section 90UM(5) in the Wife’s order 1 is erroneous. Section 90UM(5) is irrelevant to these proceedings. It relates only to agreements made in non-referring States that become Part VIIIAB Financial Agreements under the provisions of section 90UE. This is plain in terms of section 90UM(1)(k) and section 90UM(5):
Section 90UM Circumstances in which court may set aside a financial agreement or termination agreement
(1) A court may make an order setting aside, for the purposes of this Act, a Part VIIIAB financial agreement or a Part VIIIAB termination agreement if, and only if, the court is satisfied that:
…
(k) if the agreement is a Part VIIIAB financial agreement covered by section 90UE - subsection (5) applies.
…
(5) This subsection applies if:
(a) at least 1 of the spouse parties to the agreement was not provided, before signing the agreement, 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 to that party of making the agreement; or
(b) if this advice was provided to at least 1 of the spouse parties to the agreement – that party was not provided with a signed statement by the legal practitioner stating that this advice was given to that party;
and it would be unjust and inequitable, having regard to the eligible agreed matters (within the meaning of section 90UE) for the agreement, if the court does not set the agreement aside.
The Financial Agreement was made between the parties in New South Wales, a referring State, the whole of their de facto relationship having taken place in New South Wales. No non-referring State de facto financial law was involved.
What the Wife is actually seeking in her order 1 is a declaration that the Financial Agreement is not binding on the parties by reason of a failure of compliance with section 90UJ(1)(b), the Court having the power to make the declaration pursuant to section 90UN(a), by reference to section 31 of the Judiciary Act 1903 (Cth).[1] It is necessary to make a declaration as a mere finding that the Financial Agreement is not binding is not appealable.[2]
[1] Lincoln (deceased) & Moore [2016] FamCA 547, [85]-[101] (Carew J); Frederick & Frederick [2019] FamCAFC 87, [2]-[3].
[2] Dobbs & Dobbs [2021] FamCAFC 78, [12]-[17].
In her order 2 the Wife purports to seek a declaration that the Financial Agreement be declared void for uncertainty. What the Wife is actually seeking is an order pursuant to section 90UM(1)(e) setting aside the Financial Agreement on the basis that it is void for uncertainty.
In her order 3 Wife purports to seek an order pursuant to section 90UM(6) adjusting property between the parties by requiring the Husband to transfer to her the whole of his interest as tenant in common in equal shares with her in real property at B Street, Suburb C (‘the B Street, Suburb C property’), “or such other proportion that is determined to be just and equitable by that Court.”
Section 90UM (6) is in the following terms:
90UM Circumstances in which court may set aside a financial agreement or termination agreement
…
(6) A court may, on an application by a person who was a party to the Part VIIIAB financial agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial agreement and any other interested persons.
The subsection is not some species of shorthand version of section 90SM for alteration of property interests between parties to a de facto relationship that has broken down without having to go through the legislative pathway required by section 90SM. The purpose of the subsection is that when a Court sets a financial agreement aside, the Court may make such orders as may be necessary to undo or adjust things that may have been done pursuant to the terms of the failed financial agreement so that alterations of rights and legal positions affected under the terms of that failed agreement do not thwart a restitution of parties’ proper positions, whether they then go on to a section 90SM adjustment of property proceedings or not, though the discretion provided in the subsection is wider than simply putting the parties into their original positions.[3]
[3] Grainger & Bloomfield and Anor [2015] FamCAFC 221, [59]-[73].
What the Wife is actually seeking in her order 3 is an adjustive property order in her favour under section 90SM.
The orders sought by the Husband in his Response to Application for Final Orders are as follows:
(1)A Declaration that the Financial Agreement entered into by the parties dated 18 April 2016 (‘the Agreement’), is a Pt VIIIAB Financial Agreement pursuant to the Family Law Act 1975 (Cth).
(2)A Declaration that the Agreement is binding on the parties pursuant to s 90UJ(1B) of the Family Law Act 1975 (Cth).
(3)An order that the parties forthwith take all necessary steps and execute all necessary documents to cause the sale of the property known as B Street, Suburb C (‘the B Street, Suburb C property’) and failing such agreement at a price to be determined by the proper officer of the Real Estate Institute or [sic] NSW or their nominee and that the proceeds of the said sale be distributed as follows: –
(a)Payment of agents commission and advertising expenses an [sic] legal expenses of the sale;
(b)Payment of any money due and owing to the mortgagee,
(c)Payment of any monies payable to the Respondent [the Husband] pursuant to any orders of this court,
(d)The net balance to be divided between the parties as follows: –
(i)50% to the Applicant; and
(ii)50% to the Respondent
(4)If the B Street, Suburb C property fails to be sold by private treaty within three (3) months from the date of these orders then each party to take all necessary steps and execute all necessary documents to cause the B Street, Suburb C property be sold by public auction at the earliest possible date thereafter at a reserve price agreed by the parties and failing such agreement at a reserve price to be determined by the proper officer of the Real Estate Institute or [sic] NSW or their nominee and that the proceeds of the said sale be distributed as follows: –
(a)Payment of agents commission and advertising expenses and legal expenses of the sale;
(b)Payment of any money due and owing to the mortgagee,
(c)Payment of any monies payable to the Respondent pursuant to any orders of this court,
(d)The net balance to be divided between the parties as follows: –
(i)50% to the Applicant; and
(ii)50% to the Respondent
(5)Pending the completion of the sale of the B Street, Suburb C property, the Applicant to pay to the Respondent an occupation fee for her continued occupation of the B Street, Suburb C property such occupation fee to be calculated at the rate of $263 per week commencing 5 May 2019 (being three (3) months after the date of final separation of the parties) until the completion date of the sale of the B Street, Suburb C property.
(6)The Application filed by the Applicant on 1 July 2019, be dismissed.
(7)The Applicant to pay the Respondent’s costs either as agreed or assessed.
What the Husband seeks by his order 1 is a declaration that the Financial Agreement is a Part VIIIAB Financial Agreement that is binding on the parties. It would only be necessary to consider the Husband’s order 2 if the Wife was successful in satisfying the Court that section 90UJ(1)(b) was not satisfied in relation to the Financial Agreement, but that the Court is satisfied that it would be unjust and inequitable if the agreement were not binding on the parties and so make the declaration provided for in subsection (1B) that the Financial Agreement is binding on the parties.
Orders 3 and 4 sought by the Husband are by way of enforcement of clause 5 (b) and (c) of the Financial Agreement.
Order 5 sought by the Husband was not grounded by him in any power under the Act or otherwise. Section 90UN(b) provides that in proceedings relating to a Part VIIIAB financial agreement the Court:
… 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.
No part of section 90UN provides a power to the Court to order the payment by one party to the Financial Agreement to the other party to the Financial Agreement of an occupation fee in relation to a real property dealt with in the Financial Agreement. But even more relevant than that, no admitted evidence was presented in the Husband’s case to ground the making of the order even if there was a power, or in relation to the amount of the occupation fee claimed.
Mr Flaherty conceded in paragraph 5.1 of his case outline that order 5 sought by the Husband should not be made. I need say nothing further about order 5 as sought by the Husband in these Reasons.
The evidence
The parties met in about 2011. The Wife asserts that the parties commenced cohabitation in March or April 2011 at a home owned by her at Suburb D, [4] whereas the Husband asserts that the parties commenced their cohabitation in 2015 when the parties completed the joint purchase of the B Street, Suburb C property. The disputed evidence as to commencement of cohabitation makes no difference in these proceedings.
[4] Paragraph 9 of the Wife’s affidavit; Paragraph 25 of the Wife’s Initiating Application.
The parties separated on 4 February 2019 and the Wife and at least one of her adult children from a previous relationship remains in occupation of the B Street, Suburb C property up to the final hearing, whilst there is the inference, though it is not made specific in any of the evidence, that the Husband vacated the B Street, Suburb C property at separation, his place of residence at the time of filing his Response and at the time of the final hearing being in Suburb F.
The parties exchanged contracts to purchase the B Street, Suburb C property on 7 October 2014. The evidence of the parties in relation to contributions to the purchase price and so forth is not relevant to the current issues for determination. Settlement of the purchase occurred on or about 3 December 2014 and at some time thereafter (the Husband says January 2015, the Wife is silent on the matter), the parties and the Wife’s two children from a previous relationship commenced to reside in the B Street, Suburb C home.
As mentioned previously, the Wife attaches a copy of the Financial Agreement to her affidavit as purported annexure “A”.
The page numbering of the document is not consistent. The first page is a cover sheet and the second page a table of contents. The Financial Agreement proper starts on page 3 with the words “THIS AGREEMENT dated 18th day of April 2016”, the names the parties, has recitals A to I and operative clauses 1 to 11. On the first page 9 is the execution page, signed by each of the parties beside their names, each witnessed by the party’s solicitor.
Clause 6 is headed “Independent legal advice” and reads:
That the parties each state and warrant to the other party that as recorded in this agreement and as certified in an annexure to this agreement that before this agreement was signed by him or her, he or she was provided with independent legal advice from a legal practitioner on the following matters:
(a) The effect of the agreement on the rights of that party; and
(b) The advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement.
Annexure A to the Financial Agreement lists the “Separate property” of the Husband and Annexure B lists the “Separate property” of the Wife.
Annexure C refers to joint assets and list only the B Street, Suburb C property and gives an agreed estimated value, and refers to joint liabilities and list only “Mortgage to Commonwealth Bank” and gives an agreed estimated value. All of the pages of the Financial Agreement up to and including Annexure C are signed at the bottom by each of the parties and witnessed by each of their solicitors.
On page 13 of the Financial Agreement is a “Statement under section 90UJ(1) of the Family Law Act 1975” completed by the solicitor for the Husband and dated 18 April 2016.
On page 14 is a “Statement under section 90UJ(1) of the Family Law Act 1975” that reads as follows:
I, [Mr E] solicitor of [E Lawyers], and being independently instructed by [Ms Talley] certify the following:
1. This statement is an annexure to this section 90UC financial agreement entered into between [Mr Patterson] and [Ms Talley].
2. I provided my client with independent legal advice prior to entering into this agreement as to the following matters:
a. The effect of this agreement on their rights; and
b. The advantages and disadvantages, at the time that the advice was provided, to my client of making this agreement.
Dated: 10/4/16
The statement is signed by Mr E, Solicitor.
Given that the first issue be determined by the Court is as to whether or not the Financial Agreement as made is binding on the parties under section 90UJ(1), the evidence of the Wife is the most germane and as it is scarce I will set it out almost in full.
The Wife says in her trial affidavit that in or about March 2016 the Husband began discussions about the parties entering into a “pre-nup” due to his previous experiences of financial matters following the breakdown of a relationship.
The Wife says in paragraph 24 of her affidavit:
Arrangements were made for me to attend the offices of [E Lawyers] where I was introduced to a man who identified as “[Mr E]” who introduced himself to me as a “lawyer”.
The implication from that evidence is that arrangements were made by someone, an implication being by someone other than the Wife herself, for the Wife to attend the offices of E Lawyers, that she did so and that she met there, for the first time, a lawyer named Mr E.
The Wife goes on to say in paragraphs 24 to 27 of her affidavit that the person who had identified himself as “Mr E” and introduced himself to her as a “lawyer” showed her the Financial Agreement dated 18 April 2016 and that he:
… pointed to several locations on the BFA for me to sign, and I did so. This meeting lasted no more than several minutes and at the conclusion of the meeting, [Mr E] invited me to prepare a will. I then left [Mr E]’s office and did not hear from him again. I did not retain for my records a copy of the BFA. A copy was obtained by my solicitors from [Mr Patterson’s] solicitors. [Mr E] did not give me any advice whatsoever.
During the Wife’s cross-examination, she gave evidence that she herself rang and made the appointment to see a solicitor already known to her named Mr E at Suburb G. When she was asked in a cross-examination how she knew that solicitor she answered:
[Mr Patterson] found him on the Internet.
However, it transpired further in cross-examination that she already knew the solicitor named Mr E, having dealt with him “a couple of years before” in relation to a previous matter concerning her daughter. She gave evidence that she had previously been to an appointment with Mr E at his office at Suburb G and that she had also been with him at court at some time following that appointment.
Accordingly, her evidence in paragraph 24 of her affidavit that “Arrangements were made for me to attend the offices of E Lawyers” was less than frank evidence as she made that arrangement. There is no suggestion in any of the evidence that the Husband made or is involved in making the arrangement, or anyone else other than the Wife.
Further, her evidence in paragraph 24 of her affidavit that “I was introduced to a man who identified as “Mr E” who introduced himself to me as “lawyer”” was also far less than frank as she was already acquainted with the solicitor Mr E, having dealt with him previously and now returning to him for further assistance.
Towards the end of her cross-examination, the Wife was asked some further questions about having met the solicitor previous to the day she attended to sign a financial agreement and was put to her:
MR FLAHERTY: he [the solicitor Mr E] was familiar to you when you saw him?
to which she responded:
WIFE: yes.
Mr Moutasallem put to the Husband in cross-examination that he had met the solicitor, Mr E prior to April 2016 and that the Husband had attended a meeting in Mr E’s office about two years prior to April 2016, to both of which propositions the Husband replied “No”.
Mr Moutasallem put to the Husband that he had helped the Wife find Mr E, to which the Husband replied “Incorrect”.
I am satisfied on the evidence that the Husband had no part whatsoever in identifying the solicitor to be consulted by the Wife about the Financial Agreement, Mr E of E Lawyers, or in arranging her appointment in relation to the Financial Agreement.
The Wife gave evidence in cross-examination that on the day that she signed the Financial Agreement she drove herself from the B Street, Suburb C home to the solicitors office at Suburb G, that she knew that she was going there to discuss legal matters involving the Husband and that she knew that she was going there to talk about a “pre-nup”. The following exchange then took place:
MR FLAHERTY: when you went in there you saw the solicitor and you spoke to him about the contents of the pre-nup?
WIFE: I spoke to him, yes, he produced some documents which I know now where the BFA and they’re dated April 2016 and he showed me on the documents, on the BFA where it required my signature and I did so, then it took like several minutes or so and then on the conclusion of the meeting he offered to prepare a will for me.
MR FLAHERTY: you discussed the contents of the document with him?
WIFE: as I was there he just pointed out where to sign, I signed, he took several minutes, then…
MR FLAHERTY: he discussed the contents of the document with you, did he not?
WIFE: no.
MR FLAHERTY: he didn’t?
WIFE: he showed me where I needed to sign, so, I did, it took several minutes or so and then on finishing he said “would you like me to prepare a will for you” and I left.
MR FLAHERTY: you had an opportunity to read the document with [Mr E].
WIFE: no
MR FLAHERTY: are you saying he denied you the opportunity to read it?
WIFE: yes.
The Wife was then taken to the statement under section 90UJ(1) signed by Mr E and it was read to her and at the same time she had the page of the document in front of her in the witness box. She confirmed that she had seen the solicitor signed the document. It was put to her by Mr Flaherty:
You have not asked him to come to court?
to which she responded:
Yes we did.
There was no evidence presented of any request being made to Mr E to attend Court to give evidence by on behalf of the Wife. On the contrary, the letters in Exhibit A2 made it plain that the Wife’s solicitors were advising the Husband’s solicitors that the Husband should call Mr E to give evidence, not the Wife.
The Wife confirmed that Mr E charged her a fee for her attendance at his office and that she paid that fee. The following exchange occurred:
MR FLAHERTY: He charged you a fee for this occasion?
WIFE: Yes.
MR FLAHERTY: You went there to get advice?
WIFE: Yes.
MR FLAHERTY: Why pay money for advice you didn’t get?
WIFE: I don’t know. I didn’t get any advice. I paid him and he did not do a proper job. He did not provide me with what he was supposed to provide me.
MR FLAHERTY: You signed the document without reading it, without knowing what’s in it?
WIFE: Yes.
MR FLAHERTY: When you signed it, what did you think you were signing?
WIFE: The BFA.
MR FLAHERTY: You knew you were signing a binding financial agreement?
WIFE: Yes.
MR FLAHERTY: You knew it would affect the financial relationship between yourself and the Respondent, did you not?
WIFE: Yes.
MR FLAHERTY: You are there for the purpose of getting advice from this particular solicitor about its contents, weren’t you?
WIFE: Yes.
MR FLAHERTY: You say you signed it without being given opportunity to read it?
WIFE: Yes.
MR FLAHERTY: You say you signed it without knowing what was in it?
WIFE: Yes.
MR FLAHERTY: Despite all of that you paid a fee?
WIFE: Yes.
The Wife was then taken by Mr Flaherty to Annexure A listing the Husband’s separate property and Annexure B listing her separate property. There was some confusion for the witness whilst she assumed that a reference to “property” meant real estate, her home, but she was made fully aware that the property listed as her separate property in Annexure B – her superannuation with Super Fund H, her Commonwealth Bank Account and her Motor Vehicle 1– was property.
The Wife having identified the property in Annexure B as her property as at the date she signed the Financial Agreement, the following crucial cross-examination occurred:
MR FLAHERTY: You signed at the bottom?
WIFE: Yes.
MR FLAHERTY: You are not saying that Annexure B was inaccurate at that time. Is that an accurate at 10 April 2016 statement of your property at that time?
WIFE: Yes.
MR FLAHERTY: You signed it knowing it was accurate?
WIFE: Yes.
MR FLAHERTY: In order to know it was accurate at the time you must’ve read it.
WIFE: Yes.
MR FLAHERTY: Not only that, you must have discussed the contents of it with the solicitor. Isn’t that right?
WIFE: Yes.
MR FLAHERTY: Let me put it to you in a general form. I’m suggesting to you that not only did you discuss that page with the solicitor, you discussed the whole document with the solicitor. Isn’t that right?
WIFE: Yes.
Accordingly, the Wife in her cross-examination quoted in the last paragraph gave evidence that conflicted with both her evidence earlier on in cross-examination, and with her evidence in chief in her trial affidavit – that the only transaction between herself and the solicitor during the appointment was the solicitor indicating where on the Financial Agreement she was to sign, the Wife signing the Financial Agreement and the solicitor inviting her to prepare a will.
During re-examination by Mr Moutasallem the following occurred:
MR MOUTASALLEM: this [Mr Flaherty] asked you “did you discuss the whole of the BFA with your solicitor” – do you remember that question?
WIFE: he didn’t say it like you did. Yeah, he asked me that question and I said yes.
MR MOUTASALLEM: why did you say yes?
WIFE: because I thought I was … he asked me did I …. um …. about the car and everything, did I go to a solicitor about that, writing what I, like, my car was worth and everything, and I said yes. I didn’t know he was talking about the BFA. Does that make sense?
Mr E was not called give evidence by either party.
In Annexure A to the Financial Agreement an asset of the Husband is listed as “Property at J Street, Suburb F” with an agreed estimated value of $800,000. The Wife’s execution of the Financial Agreement is not dated, but the statement completed by Mr E is dated 10 April 2016, the statement completed by the Husband solicitor is dated 18 April 2016, and the agreement is dated 18 April 2016.
During the Husband’s cross-examination by Mr Moutasallem, a call was made for the original copy of the letter sent by the Husband’s solicitors to the Wife’s solicitors enclosing a copy of the Financial Agreement in draft. The call was answered and a letter dated 15 March 2016 was produced and I am satisfied that the draft was sent from Husband’s solicitors to the Wife’s solicitors on that day.
On 23 March 2016 and auction was held at the Hotel K of the Husband’s property at J Street, Suburb F. The Husband attended the auction and the property sold at the auction for $945,000. Both parties agree that the Wife was not present at the auction itself but was present at the club on the day.
The Husband says in paragraph 22 of his affidavit, referring to the Wife, that he:
… joined her and her son shortly after the auction for a drink and spent some money on the poker machines. I told the Applicant what had happened at the auction.
The Wife gave evidence during her cross-examination that she had dinner with the Husband at that club on that day after the auction, that he told her that he had sold his house, and she asserted that she was not at any time told the price at which the property was sold.
It was certainly within the Wife’s knowledge when she attended the office of her solicitor to sign the Financial Agreement that the Husband’s J Street, Suburb F property had been sold at the auction. She says so in her evidence in cross-examination.
I accept the evidence of the Husband over that of the Wife and I find that the Wife was aware when she attended to sign the Financial Agreement that the Husband’s J Street, Suburb F property referred to in his list of separate property at Annexure A to the Financial Agreement was at that time subject to a contract for sale at the sale price of $945,000.
His answers in cross-examination were given at all times in a direct and forthright manner without any prevarication and without any attempt to gild his answers with “arguing his case” by giving answers unresponsive to the question. By comparison, the Wife gave her evidence in cross-examination in an evasive and at times prevaricating manner and made several attempts to “argue her case” in non-responsive answers, despite having been given a clear explanation by me early in her evidence that her duty was to answer the questions she was asked responsively.
The Wife contradicted her own evidence in cross-examination on at least two occasions in relation to important evidence – as to whether or not she had read any of the Financial Agreement at the time she signed it, and as to whether or not she discussed any part of the Financial Agreement with a solicitor.
After presenting to the Court evidence in chief designed to imply that the appointment for her to consult Mr E was arranged for her by the Husband who had “found him on the Internet”, the Wife conceded in cross-examination that she had herself made the appointment and that not only had she met Mr E prior to attending his office in April 2016, but that she had attended a previous conference with him and also attended at a court with him a couple of years before April 2016.
The law
The statutory requirements relating to financial agreements between parties to a de facto relationship is found in Part VIIIAB, Division 4 of the Act. There is no need to recite all of the relevant sections.
When the parties made the agreement they were ordinarily resident in New South Wales, a participating jurisdiction.[5]
[5] Family Law Act 1975 (Cth) s 90UA.
The Financial Agreement purports to be a Part VIIIAB financial agreement under section 90UC, made while the parties were in a de facto relationship. There was no contest between the parties that the six requirements under the legislation for a financial agreement were satisfied – it is a valid agreement under contract law; in writing; made between parties to a De Facto relationship; with respect to how all or any of the property of either or both of the parties at the time the agreement was made is to be distributed on the breakdown of their relationship; the parties were not already parties to an existing Part VIIIAB financial agreement binding on them with respect to any of the matters dealt with in this financial agreement; and it is expressed to be made under section 90UC of the Act.
Pursuant to section 90UG, a Part VIIIAB financial agreement that is binding on the parties and that deals with how all or any of the parties property is to be distributed is of no force or effect unless and until de facto relationship breaks down. There was no contest between the parties that the de facto relationship broke down and they separated on 4 February 2019. Clause 4 of the Financial Agreement under the heading “Separation” reads:
Separation is taken to have occurred when the parties have been living separately for no less than 3 months and one party notifies the other in writing that they intend to end the De Facto relationship. The parties will not be taken to have separated if they have been living separately solely due to holidays, illness or business.
No evidence was presented specifically in relation to a written notification from one party to the other that they intend to end the de facto relationship, but the commencement of these proceedings by the Wife filing her Initiating Application and seeking (by implication) property adjustment orders under section 90SM is a notice in writing that as far as the Wife is concerned she intended to end de facto relationship, and it was served on the Husband.
Section 90UJ(1) provides that a Part VIIIAB financial agreement is binding on the parties 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 as not been terminated and has not been set aside by a court.
Section 90UJ(1A) provides that:
(1)If the agreement is signed by all parties; and
(2)One or more of the requirements in subsection (1) (b), (c) and (ca) are not satisfied; and
(3)The Court is satisfied that it would be unjust or inequitable if the agreement were not binding on the spouse parties (disregarding any changes in circumstances from the time the agreement was made); and
(4)The agreement has not been terminated or set aside by the Court,
then the Court may make an order under section 90UJ(1B) declaring that the Part VIIIAB financial agreement is binding on the parties on the application of a party seeking enforcement, despite the absence of those formal requirements.
Under section 90UJ(4), a Court may make such orders for the enforcement of a Part VIIIAB financial agreement that is binding on the parties to the agreement as the Court thinks necessary.
Section 90UF provides that a Part VIIIAB financial agreement that is binding on the parties to the extent that it deals with how, in the event of the breakdown of the de facto relationship, all or any of the property or financial resources of either or both of the parties at the time when the agreement was made or at a later time during de facto relationship are to be dealt with, is of no force or effect until a separation declaration is made.
A valid separation declaration is a written declaration signed by at least one of the parties to the Part VIIIAB financial agreement stating that:
(1)The parties lived in a de facto relationship;
(2)They have separated and are living separately and apart at the declaration time; and
(3)In the opinion of the party making the declaration, there is no reasonable likelihood of cohabitation being resumed.
The declaration time is the time when the declaration was signed by the party to the Part VIIIAB financial agreement. This requirement will become of particular significance later in these Reasons.
The issue in these proceedings to be addressed first is whether or not the Financial Agreement is a Part VIIIAB financial agreement binding on the parties. If it is binding on the parties, then the first part of the Wife’s application fails and the Court goes on to consider the Wife’s application that the Financial Agreement be set aside under section 90UM(1)(a) for having been obtained by fraud due to a nondisclosure of a material matter, and under section 90UM(1)(e) for being void for uncertainty.
However, if a finding is made that the Wife did not receive the required legal advice from a legal practitioner about the effect of the agreement on her rights and about the advantages and disadvantages, at the time that the advice was provided, to the Wife of making the agreement, then the Court must go on to consider the Husband’s application that despite that lack a declaration should be made under section 90UJ(1B) that the Financial Agreement is binding on the parties, and if the declaration is made, then go on to consider the Wife’s applications in relation to setting aside the Financial Agreement due to non-disclosure of a material matter or for being void for uncertainty.
The Wife asserts that she did not receive the legal advice required by section 90UJ(1)(b) from the solicitor Mr E or at all and that therefore the Financial Agreement is not binding on the parties.
For the purpose of resolving that issue, the Court must determine if it is satisfied on the balance of probabilities that section 90UJ(1)(b) has been complied with in relation to the Wife, and, if not, should the Court exercise the discretion under section 90UJ(1B) and make an order declaring that the Financial Agreement is binding on the parties on being satisfied as to all the criteria in section 90UJ(1A):
In other words, if [section 90UJ(1)(b)] is not satisfied in relation to the agreement, it may still be binding if pursuant to [section 90UJ(1A)(c)] ‘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)’.[6]
[6] Logan & Logan [2013] FamCAFC 151, [35].
The onus of establishing that a financial agreement is binding falls upon the party asserting that fact because the legislation provides that an agreement is binding “if, and only if” the prescribed matters are established. It follows that the party relying upon the agreement must establish the existence of all those matters, including the giving of the requisite legal advice to both parties.[7]
[7] Hoult & Hoult [2013] FamCAFC 109, [60], [254] (‘Hoult [2013]’).
However, once the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence that would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate. The certificate, and any relevant recital or clause in the Financial Agreement itself, should be treated as prima facie evidence of compliance with the legal advice component of section 90UJ(1). The question then to be posed is whether the party asserting the Financial Agreement is not binding has adduced evidence, or elicited evidence in cross-examination, that was “sufficiently precise and definite to displace the inference” that the requisite advice had been given.[8]
[8] Hoult & Hoult [2013] FamCAFC 109, [62], [96]-[97], [276].
The production of a solicitor’s certificate, and any reference to a relevant recital or clause in the Financial Agreement, causes the evidentiary burden to pass to the party disputing the binding nature of the Financial Agreement to adduce sufficient evidence to displace the inference or at least a place the matter into doubt.[9]
[9] Hoult & Hoult [2013] FamCAFC 109, [98]-[99].
When dealing with the issue of whether or not required legal advice has been given the only enquiry necessary is as to whether advice was given, not as to the content of that advice and certainly not a consideration of the accuracy of the legal advice provided.[10]
[10] Hoult & Hoult [2013] FamCAFC 109, [279]; Logan & Logan [2013] FamCAFC 151, [51]; Wallace & Stelzer and Anor [2013] FamCAFC 199, [103].
Where the dispute is as to whether one of the parties received the required legal advice, it is open to both parties to call the solicitor asserted not to have given the requisite advice, that solicitor’s client having waived legal professional privilege under section 122(2) of the Evidence Act 1995 (Cth) by reason of the inconsistency between maintenance of the confidentiality that the privilege protects and conduct which is inconsistent with the maintenance of a confidentiality, that is, making the legal advice, or lack of it, the evidentiary issue by putting squarely into issue whether the advice required under section 90UJ(1)(b) had in fact been given.[11]
[11] Bilal & Omar [2015] FamCAFC 30, [39], [43], discussing Mann v Carnell [1999] HCA 66.
Is the Financial Agremeent binding on the parties pursuant to section 90UJ?
I have found that all the requirements for the Financial Agreement to be a Part VIIIAB financial agreement are satisfied.
Both an original of the signed financial agreement (Exhibit A1) and a photocopy of the signed financial agreement (purported Annexure “A” to the Wife trial affidavit) are in evidence. The last page of the Financial Agreement is the “Statement under section 90UJ(1) of the Family Law Act 1975” completed and signed by the solicitor, Mr E, stating that he provided the required legal advice to the Wife (‘the Wife’s solicitors certificate’). The Wife’s solicitors certificate is dated 10 April 2016.
There is no dispute raised at the hearing, and I accept, that Mr E is a legal practitioner within the meaning of that term in section 90UJ(1)(b).
In clause 6 of the agreement, the Wife states and warrants to the Husband that before signing the agreement she was provided with the required legal advice by a legal practitioner. The page on which clause 6 appears is signed by the Wife, as accepted by her in her evidence.
I find that the Wife’s solicitors certificate and clause 6 of the agreement are prima facie evidence of compliance with the requirement in section 90UJ(1)(b) and (c). The Husband adduces no other evidence in chief on the issue.
The Wife adduces evidence in her trial affidavit that her meeting with Mr E “lasted no more than several minutes” and that he “did not give me any advice whatsoever.”
At the Wife’s request a subpoena to produce documents was issued by the court to “c/- E Lawyers”, not to the solicitor corporation “E Lawyers Pty Ltd” that appears on the Wife’s solicitors certificate below Mr E’s signature, and not to Mr E himself.
The only documents produced are the documents that form Exhibit A1 – the letter of 26 July 2016 from the Husband’s solicitors to E Lawyers enclosing “original Binding Financial Agreement” and a form of “Receipt”, and an original of the signed financial agreement dated 18 April 2016.
Mr Moutasallem submitted for the Wife that an inference should be drawn by the Court not so much from the documents produced as from what is not produced, that is, no file note relating to the attendance of the Wife on Mr E in April 2016, or any other time, is produced. Mr Moutasallem says in his written submissions:
There is no file note or follow-up letter that one may expect following a detailed solicitor-client meeting were a document as important as a BFA is signed.
In relation to Wife’s assertion that the “meeting lasted no more than several minutes”, Mr Moutasallem submits that:
… the Applicant’s evidence as to the length of the conference is accepted, then the court should conclude that it was not possible for the solicitor to comply with the legislative requirements of the advice within such a short space of time.
In Hoult [2013] at [267] Strickland and Ainsley-Wallace JJ (Thackray J dissenting), on examining a question of credit said:
… We do not accept that the absence of documentation is logically or necessarily “consistent” with a failure to give the required advice. The fact that it may be prudent practice to make a file note of having given the advice cannot be translated to either a finding that the advice was not given or even that it was consistent with the advice not being given, particularly when all of the evidence of the solicitor is taken into account, and the force of the certificate and the recitals in the agreement is recognised.
No evidence was given by the solicitor in this matter, but it was open to the Wife to call the solicitor, either as a voluntary witness on affidavit or by subpoena. During her cross-examination, the following was put to the Wife and she replied accordingly:
MR FLAHERTY: You have not asked [the solicitor] to come to court?
WIFE: Yes we did.
MR FLAHERTY: He didn’t come?
WIFE: No.
When asked later in the cross-examination:
MR FLAHERTY: You have not called the solicitor?
she answered:
WIFE: Correct.
Mr Moutasallem refer the court to the decision of the Full Court in Beroni & Corelli [2021] FamCAFC 9 at paragraph [81] where the Full Court held that the absence of evidence from the solicitor need not prevent the Court accepting the evidence of a party given in cross-examination as to the circumstances in which that party executed a financial agreement with the solicitor. He referred to Bilal v Omar in submitting that it was open to the Husband to call the Wife’s solicitor and that accordingly no ‘Jones v Dunkel’ inference[12] should be made against the Wife’s case due to her failure to called Mr E. However, he sought to have the Court draw that inference from the Husband’s failure to call Mr E to give evidence.
[12] Jones v Dunkel (1959) 101 CLR 298.
The facts in Beroni & Corelli are quite different to this matter, particularly in that the evidence in the Wife’s case in Beroni & Corelli as to not having received the required legal advice from her solicitor was far more detailed than the evidence of the Wife in this matter, and the decision turned on findings in relation to unconscionability and undue influence.
The Husband’s case presents the prima facie evidence of the required legal advice having been provided to the Wife. The Wife seeks to cast doubt on that evidence and asserts in her evidence in chief that she did not receive any advice. The Wife gives contradictory evidence during cross-examination in relation to intent to call evidence from Mr E at the hearing.
Where it was open to either party to call Mr E and neither did, I find that I am not prepared to make a Jones v Dunkell inference against either party’s case. I make that finding in full cognizance of the two letters that form Exhibit A2. I do not consider that the correspondence from the Wife’s solicitors to the Husband’s solicitors cast any greater onus on the Husband to call Mr E than the Wife.
In relation to the absence of any file note in the material produced on subpoena by “E Lawyers”, I note that it is a practice of some legal practices not to produce file notes – hand written and hardcopy or created on computer – when answering a subpoena to produce a client’s file. This is referred to, with reference to the particular firm involved in the matter, in the decision of Judge W Neville in Warner & Cummings [2017] FCCA 432 at paragraph [67] and is the subject of the majority in Hoult [2013] at paragraph [267] referred to above.
The real difficulty that I have in accepting that the evidence in the Wife’s case disproves or even casts into sufficient doubt the evidence in the Husband’s case that required legal advice was given to the Wife is her evidence in cross-examination that I have set out in detail earlier in these Reasons.
Mr Moutasallem submitted that based upon the Wife’s manner in giving her evidence in cross-examination, the Court would find that she was “a witness of truth”. I do not so find. I find that she is not a witness of complete credit by reason of the contradictory evidence given by her in cross-examination.
Mr Moutasallem submitted that such contradictory evidence was caused by the Wife being “clearly confused about the nature of the questions she was being asked”, and that her confusion stemmed from her misunderstanding of the use of the word “property” when she was being asked about Annexure B to the Financial Agreement setting out her separate property, and that she assumed the word property must refer to a real estate property. I do not accept that submission because when the Wife gave her contradictory evidence toward the end of her cross-examination by Mr Flaherty, it was after her confusion as to the meaning of the word “property” had been fully dealt with by explanation by me, and her full and clear acceptance that the three items of property referred to in Annexure B to the Financial Agreement were her property at the time she entered into the agreement.
Her cross-examination by Mr Flaherty went on from there to have her confirm a second time that the detail in Annexure B was accurate and then she confirmed that in order to know that it was accurate she had read it at the relevant time, and that not only had she read it at the relevant time but that she discussed the contents of Annexure B with “the solicitor”, despite having asserted in her evidence in cross-examination that she had been given no opportunity to read the Financial Agreement and that she had in fact not read the Financial Agreement.
It was then put to the Wife in very clear terms by Mr Flaherty that not only did she discuss the contents of Annexure B with the solicitor, but that she “discussed the whole document with the solicitor”, which the Wife accepted.
During the Wife’s re-examination, which I have also set out in detail earlier in these Reasons, she was given an opportunity by Mr Moutasallem, following some legal argument in her absence, to clarify or explain her acceptance that she had discussed the whole of the Financial Agreement with the solicitor, but her responses were entirely unsatisfactory. She asserted that when giving her answer “Yes” to Mr Flaherty’s question “I’m suggesting to you that not only did you discuss that page with the solicitor, you discussed the whole document with the solicitor. Isn’t that right?”, she thought she was still being asked about discussing the value of her car and the other items are property in Annexure B with a solicitor.
There was no evidence of her having consulted any solicitor other than Mr E in relation to the Financial Agreement, and even this evidence in re-examination was in contradictory of her earlier evidence about nothing having transpired between herself and Mr E at her appointment other than her signing the document and him asking her if he could prepare a will for her.
Given the importance of those final questions put to the Wife by Mr Flaherty during cross-examination in relation to her having discussed first the contents of Annexure B and second “the whole document”, I was paying most particular attention to the demeanour of the Wife in the witness box in giving her evidence. I do not consider that she was confused and I do not consider that the sequence of questions put to her by Mr Flaherty commencing with Annexure A were in any way confusing.
Taking all of the evidence into consideration, I do not consider that the Wife has cast sufficient doubt on the inference raised by the Wife’s solicitor’s certificate and the Wife’s acknowledgement by her signature of clause 6 of the Financial Agreement to prevent a finding that before signing the Financial Agreement, the Wife was provided with independent legal advice from a legal practitioner about the effect of the agreement on her rights and about the advantages and disadvantages, at the time the advice was provided, to the Wife of making the agreement.
I do not accept the Wife’s evidence early in her cross-examination that she was not given an opportunity to read the Financial Agreement and that she did not read the Financial Agreement.
I accept, based upon the clear inference in the Wife’s evidence at the end of her cross-examination as to having read and discussed the contents of Annexure B, that the Wife had read and was aware of the contents of the Financial Agreement when she signed the document in the presence of Mr E.
Accordingly, I find that the Financial Agreement is a Part VIIIAB financial agreement under section 90UC of the Act and that it is binding on the parties.
Is the Financial Agreement void for uncertainty pursuant to section 90UM(1)(e)?
The Wife seeks a declaration that the Financial Agreement be declared void for uncertainty. As stated earlier, what the Wife is really seeking is an order pursuant to section 90UM(1)(e) of the Act setting aside, for the purposes of the Act, the Financial Agreement on the basis that it is void for uncertainty.
Mr Moutasallem did not make any written submissions on the issue and in verbal submissions he referred to recital G of the Financial Agreement that reads:
This agreement is intended to solely deal with the separate property of the parties in the event of the breakdown of their De Facto relationship without resort to litigation.
He submitted that as there was no recital referring to the parties’ joint property, but only to separate property, there was:
… an obvious and important inconsistency between the recitals and the rest of the binding financial agreement
and that by reason of the uncertainty in the text of the document it is void for uncertainty.
I put to Mr Moutasallem that the authorities say that when considering a question of certainty, the Court is to take the whole of an agreement into consideration and that the Court’s tendency is to find for the agreement rather than to find against the agreement, with which Mr Moutasallem agreed. I also put to Mr Moutasallem that the essential ingredients of a contract that must be certain are:
(1)The parties to the contract
(2)The principal undertakings which are only be found in the operative clauses;
(3)The subject matter of the contract and any price,
and that all were present, certain, and satisfied in the Financial Agreement.
Mr Moutasallem, quite properly, did not cavil with that contention.
Mr Flaherty submitted in his written submissions that the terms of the Financial Agreement are clear and unambiguous, particularly operative clause 5 providing that upon a breakdown of the de facto relationship evidenced by separation as set out in paragraph 4 of the Financial Agreement, each party will remain individually entitled to their separate property and their interest in joint property to the exclusion of the other, with the joint real property to be divided between them in accordance with their entitlements as evidence in writing or title documentation, and in the event of a failure by the parties to agree as to who is to have possession of any of the real property, both parties will take all necessary steps to sell the real property, with the mechanics for such sale set out and how any net balance of sale of the parties is to be divided.
He submitted that on the evidence contained in the Financial Agreement, and in each of the party’s evidence in chief, the only “joint real property” of the parties was the B Street, Suburb C property.
For a contract to be legally effective it must be sufficiently certain, that is, it must be both clear and complete, at least in the essentials.[13] If a contract is not sufficiently certain it is said to be void, unless the uncertain part can be severed, leaving the rest of the agreement intact.
[13] Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429, 436-437 (Barwick CJ).
A contract is affected by uncertainly only if its essential terms are uncertain or lacking.[14] A term or terms may be uncertain due to being any one or a combination of vague, ambiguous, contradictory, meaningless, incomplete or due to a mistake.
[14] Axelsen v O’Brien (1949) 80 CLR 219, 226 (Dixon J).
In approaching a question of certainty, the Court must consider the whole of the document.[15] A Court should be astute to adopt a construction that will preserve the validity of the contract.[16]
[15] ABC v Australian Performing Rights Association Inc (1973) 129 CLR 99, 109 (Gibbs J in dissent). Though his Honour was in dissent, his Honour’s judgment on this matter has been followed many times.
[16] Meehan v Jones (1982) 149 CLR 571; WN Hillas & Co Ltd v Arcos [1932] UKHL 2.
Inessential terms that are vague or incomplete can be filled out [?] by the Court, ignored or severed. What is essential and inessential in a contract depends on the intention of the parties. The parties to the contract, the principal undertakings, the subject matter and the price must be certain.[17]
[17] BridgeWholesale Acceptance Corp (Australia) Ltd v Burnard (1992) 27 NSWLR 415.
A contract is not void for uncertainty merely because its terms are ambiguous, so long as they are capable of meaning.[18]
[18] Upper Hunter County District Council v Australian Chilling & Freezing Co (1968) 118 CLR 429; Trustees Executors and Agency Company Ltd & Anor v Peters (1960) 102 CLR 537.
If a contract contains contradictory provisions, the Court’s task is, so far as it is possible, to resolve the conflict by looking at the contract as a whole and asserting the parties’ evident intention.[19]
[19] TheAustralian Guarantee Corporation Ltd v Balding (1930) 43 CLR 140, 150-153 (Isaacs J).
It is the case that Recital G refers to the agreement being intended:
… to solely deal with the separate property of the parties in the event of the breakdown of their De Facto relationship.
and indeed that recital F refers only to the parties’ agreement to enter into the Financial Agreement:
to deal with the division of their separate property in the event of the breakdown of their relationship)
but there is no necessity in law that the recitals to an agreement, even a deed under seal, must refer to, summarise or explain the whole of the agreement itself as embodied in the operative clauses.
The clauses in the Financial Agreement are set out under a heading “OPERATIVE PART”, and clause 1 is under the heading “Separate property”, whilst clause 2 is under a heading “Joint property”, which refers to annexure C to the Financial Agreement as setting out the “joint property of the parties … which the parties have agreed the values attributed thereto” and provides that “Joint property is all property which is not defined as separate property as per paragraph 2 herein.”
The reference there to paragraph 2 is incorrect and should be a reference to paragraph 1 that deals with and defines separate property, but that error does not lead to any uncertainty.
As I have already noted, paragraph 5 deals with the division of the parties’ property, both separate and joint, in the event of a breakdown of the de facto relationship and provides precise machinery as to how any joint real property the subject of a dispute as to which party is to have possession is to be dealt with, by sale and equal division of the net proceeds of sale between the parties.
I find on taking the Financial Agreement document as a whole that there is no uncertainty despite the lack of reference to “joint property” and “joint real property” of the parties in the recitals and despite errors found in the document.
I have found that I am satisfied that the Wife read and was aware of the contents of the document before signing and so, passing from the objective to the subjective, I find that there was nothing about the document that would have given rise to an uncertainty on the part of the Wife in relation to her understanding thereof.
I find that the Financial Agreement is certain as to the parties, principal undertakings of the parties, all of the subject matter of the Financial Agreement, and as to what is to be done in relation to the separate and joint property of the parties upon a breakdown of their de facto relationship, and division of proceeds of sale.
Should the Financial Agreement be set aside under section 90UM(1)(a)?
The Wife does not seek an order that the Financial Agreement be set aside on the basis that it was obtained by fraud in her Initiating Application, but in paragraphs 6 and 7 of Mr Moutasallem’s outline of submissions document, he submits that the Court would find that the Husband failed to properly disclose a material matter and that for that reason, amongst others, the Court “may set aside the binding financial agreement”.
Later in the document at paragraph 16 Mr Moutasallem submits:
As to non-disclosure, the Applicant will point to the failure of the Respondent to disclose to her the true value of a property owned by him in [J Street, Suburb F] and the fact that it was sold. The Respondent sold his property in [J Street, Suburb F] by way of public auction for $945,000 on 23 March 2016. Notwithstanding that, the BFA incorrectly says that the [J Street, Suburb F] property is worth $800,000.
Mr Moutasallem repeated that submission in his verbal submissions.
Section 90UM(1)(a) makes it clear that, whatever might be the position at common law (or in equity), material non-disclosure is relevant to the application of that section when considering whether or not the agreement was obtained by fraud.
In Hoult & Hoult [2011] FamCA 1023,[20] Murphy J said at [125]-[126] and [133]:
[125] But, as it seems to me, the section does not make material non-disclosure fraudulent per se. Fraud for the purposes of s 90K (1)(a) can, plainly, include material non-disclosure, but not every material non-disclosure is fraudulent. The inclusion of the phrase in parenthesis in s 90K (1)(a) is explained in my view by the desirability of making clear what might otherwise not clearly emerge from the position at common law or in equity. As a general proposition, at common law a finding of fraud in and about an agreement requires (among other things) a misrepresentation. A misrepresentation is, generally speaking, not constituted by silence or non-disclosure (material or otherwise). (See for example Magill; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 5 – 6; 60 ALR 741 at 742 – 3 per Gibbs CJ.)
[126] An exception exists to the general principle with respect to some classes of agreement where there can be said to be a duty to disclose. Contracts of insurance are the most familiar example. It might be argued analogously that agreements that satisfy a definition within the Act ought to embrace a fundamental principle enshrined in this Court’s Rules made pursuant to the same Act, namely the duty of full and frank disclosure. But, rather than leave that issue for argument, the Act has made the position clear by the specifying that fraud for the purposes of s 90K (1)(a) can be constituted by material non-disclosure.
…
[133] Further, and crucially, I have been taken to no evidence which points to, or from which it can be inferred, that any such failure to disclose as does exist in that respect was done so with any intention to deceive. As I have said, in my view, [s 90K (1)(a) (incorrectly referred to as s 90G (1)(a) in the published judgment)] requires that to be proved before a finding of fraud pursuant to that section is made. Even if material non-disclosure is proved (which, in my view, it is not) that is of itself, insufficient.
[20] I am conscious that his Honour’s judgment was set aside on appeal in Hoult & Hoult [2013] FamCAFC 109, however I consider his Honour’s comments here remain helpful.
I have also had regard to Nyles v Nyles [2011] FamCA 565 per Mushin J, particularly at paragraphs [179] to [182].
I have already made a finding that the Wife was aware at the time she signed the Financial Agreement that the Husband’s J Street, Suburb F property referred to in his list of separate property at Annexure A to the Financial Agreement had been sold at an auction on 23 March 2016 at the Hotel K.
I am satisfied and I find that the Wife was aware the auction was taking place at that place on that day, was at the club at the time the auction was occurring (though not at the auction), and that during the latter part of that day, she was told the sale price by the Husband.
It is the Wife’s own evidence in cross-examination that at dinner at that club following the auction, the Husband told her that the house had been sold that day.
The Husband was cross examined about his J Street, Suburb F property being referred to in Annexure A of the Financial Agreement as having an “agreed estimated value” of $800,000 when it had been sold on 23 March 2016 for $945,000. It was established during his cross-examination that the draft of the Financial Agreement, which was signed by each of the parties unaltered, was sent by the Husband’s solicitors to E Lawyers for the Wife with a letter on 15 March 2016, prior to the auction, and that to the Husband’s knowledge no one told E Lawyers after 23 March 2016 about the sale or the sale price.
The Husband also gave evidence in cross-examination that he did not tell his solicitors about the sale of the property or the sale price because he “didn’t give it a thought”, being content that the information in the instructions he had given to his solicitors for preparation of the draft Financial Agreement was correct at the time the instructions were given.
It was put to the Husband in cross-examination by Mr Moutasallem that neither party had requested or provided financial disclosure prior to 18 April 2016, and he agreed.
The settlement of the sale occurred in late June 2016.
I find on the basis that the Wife was aware that the Husband’s J Street, Suburb F property had been sold and of the sale price thereof, at the time she signed the Financial Agreement, there was no material non-disclosure represented by the “Agreed estimated value” of the J Street, Suburb F property being stated in Annexure A as $800,000 rather than the actual sale price of $945,000, that being within her knowledge when she signed, and there being no intent to mislead or deceive by the Husband.
There is no basis to make an order setting aside the Financial Agreement on the basis that it was obtained by fraud, including non-disclosure of a material matter.
The Husband’s application for enforcement of the Financial Agreement
The Husband seeks enforcement of the Financial Agreement by orders 3 and 4 sought in his Response to Application for Final Orders.
I have found that the Financial Agreement is a Part VIIIAB financial agreement binding on the parties and that there is no basis on the evidence to make an order setting the Financial Agreement aside.
I have taken the somewhat generous view that the Wife filing on 1 July 2019 her Initiating Application seeking, by intent though misstating the power, an order adjusting property between the parties consequent upon the breakdown of the de facto relationship on 4 February 2019, more than 3 months prior to the filing, satisfies clause 4 of the Financial Agreement in that “Separation is taken to have occurred”.
However, I do not have any evidence whatsoever of compliance by either party, and particularly the Husband, with the requirements of section 90UF by the signing by either party of a valid separation declaration. Accordingly, pursuant to section 90UF(1), the Financial Agreement is currently of no force or effect to the extent to which it deals with how, consequent upon the breakdown of the de facto relationship, all or any of the property or financial resources of either or both of the parties at the time when the agreement was made or at a later time and during the de facto relationship are to be dealt with.
My adoption of the filing and service on the Husband of the Initiating Application as satisfying clause 4 of the Financial Agreement as to separation cannot equate to a valid separation declaration for the purposes of section 90UF, despite being signed by the Wife herself, as it does not recite in any place that in the opinion of the Wife there is no reasonable likelihood of cohabitation being resumed. That may be the obvious fact, but that does not satisfy the section.
There is no evidence of a valid separation declaration and accordingly the Financial Agreement is currently of no force and effect for the purposes of the enforcement sought by the Husband.
Conclusion
I will make a declaration that the Part VIIIAB financial agreement under section 90UC of the Family Law Act 1975 (Cth) between Mr Patterson and Ms Talley dated 18 April 2016 is binding on the parties.
I will make an order that otherwise the Initiating Application filed 1 July 2019 and the Response to Application for Final Orders filed 13 September 2019 are dismissed except in relation to the applications for costs sought therein.
Both parties seek an order relating to costs of these proceedings. The Wife makes that application mononymously in order 4:
4. Costs.
The Husband seeks an order as follows:
7. The Applicant pay to the Respondent’s costs [sic] either as agreed or assessed.
I will give each party an opportunity to articulate their application before the Court (should they wish to press such application). With any minute of order setting out their costs application, I will make an order that any evidence and written submissions in support of any application for costs, including evidence as to quantum, be filed and served by no later than 28 days from the making of the final orders, and an order that any written submissions in reply be filed and served no later than a further 14 days thereafter.
I certify that the preceding one hundred and seventy-four (174) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Morley. Associate:
Dated: 5 September 2022
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