Thorne v Kennedy

[2017] HCATrans 148

[2017] HCATrans 148

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B14 of 2017

B e t w e e n -

THORNE

Appellant

and

KENNEDY

Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON TUESDAY, 8 AUGUST 2017, AT 10.15 AM

Copyright in the High Court of Australia

MR M.J. FOLEY:   May it please the Court, I appear on behalf of the appellant, together with my learned friend, MR P.J. WOODS.  (instructed by Somerville Laundry Lomax)

MR R.G. LETHBRIDGE, SC:   If it please the Court, I appear for the respondent, assisted by my learned friends, MS G.C. ELDERSHAW and MR D. BIRCH.(instructed by Jones Mitchell Lawyers)

KIEFEL CJ:   Yes, Mr Foley.

MR FOLEY:   This appeal turns not only on the question of lawful act duress in ground 1 but also on the evolving application of the conscience of equity to contracts through undue influence, ground 2, and unconscionable conduct, ground 3, particularly for marital financial agreements.  Public policy considerations are relevant as Part VIIIA of the Family Law Act since 2000 allows marital parties to make financial agreements which, pursuant to section 71A oust the jurisdiction of the Family Court under section 79 of Part VIII to make just and equitable orders altering property interests.  The appellant has suffered a life changing injustice and seeks relief from this High Court.

Freedom of contract is fundamental to a free society under the rule of law.  Such freedom is corrupted when the meeting of contracting minds is compromised by vitiating factors such as duress, undue influence or unconscionable conduct.  In such cases, a contract may become instead a vehicle for unjust enrichment or exploitation rather than freedom as in this case.  In some cases, public policy will intervene.  Contracts of slavery, for example, would not be enforced in an Australian court.  The contracts of indentured labour used for South Sea Islanders, then called Kanakas, in 19th century Queensland sugar cane farms, similarly, would not now be enforced.  Times change and courts change with them.

The legislation in Part VIIIA provides a procedural safeguard in the requirement for independent legal advice but leaves it wide open to the courts to determine the validity, enforceability and effective agreements and I quote from the statute:

according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts ‑

This begs some big conceptual questions for the courts in this brave new world of binding marital financial agreements. Those challenges are not made any easier by the lack of substantive legislation regulating this area as opposed to procedural. So, for example, if my client were to purchase a bale of hay or enter into a rental arrangement for an iPhone she would enjoy the protection of the Australian consumer law or, indeed, perhaps the Sale of Goods Act (Qld) ‑ ‑ ‑

KIEFEL CJ:   Perhaps we could just confine ourselves to the Family Law Act, Mr Foley.

MR FOLEY:   Yes, very well, thank you.  My point is this, that unlike other areas of contract which have been subject to regulation, this is left to the principles of law and equity to be determined by the courts.  That challenge, in my respectful submission, presents this challenge to the courts, that the courts should  ‑ ‑ ‑

KIEFEL CJ:   I think you can take it that the Court is familiar with the principles, the question is do they apply, how do they apply in this case and, in particular, what findings were made by the primary judge upon which they might operate.

MR FOLEY:   Yes, your Honour.  Well, I propose to move then to the findings of fact.  I have referred in the written outline of oral submissions to the distinction on that point to those cases where the conscience of equity applies with particular force and referred there to the article or the speech appearing in the ALJ by his Honour Justice Keane on the conscience of equity.  In particular, to the observation which appears at page 434 of the appellant’s bundle of authorities at page 98 of the ALJ article reflecting as it did the speech given by his Honour in 2009, the WA Lee Lecture in Equity, that equitable intervention in commerce is exceptional and in that respect they draw a distinction between the world of commerce and what is referred to later in the article as:

The ethical values of individual restraint, mutuality and social responsibility at play within the framework bequeathed by Chancery –

which differ from the individualism and universalism of the common law.  In short, the submission is that the Full Court fell into error in applying principles derived from commercial cases into principles that had failed to have regard to the conscience of equity in assessing the principles to be applied in this case.

KIEFEL CJ:   The critical findings of the primary judge from your point of view contained in paragraphs 92 to 94, that is where her Honour speaks of the appellant’s “inequality of financial position”, her “powerlessness” arising from “lack of financial equality”, “her lack of permanent status in Australia”, “her reliance” on him, “her emotional connectedness”, “her emotional preparation for marriage” and then at 94 her conclusions that she signed the agreement under:

duress born of inequality of bargaining power where there was no outcome available to her that was fair or reasonable.

MR FOLEY:   That is so, your Honour, but to those I would add, respectfully, the finding at appeal book 670, paragraph 48 – I am sorry, the finding at appeal book 670, paragraph 48, sorry ‑ ‑ ‑

KIEFEL CJ:   That is the only choices that were available – where she speaks of the only choices that were available to the appellant, that if the agreement is not signed the wedding is off.

MR FOLEY:   Yes, your Honour.

KIEFEL CJ:   At paragraph 95 – I think it is paragraph 95 her Honour speaks of duress as being a form of unconscionable conduct. 

MR FOLEY:   Yes, your Honour.

KIEFEL CJ:   Could it be that her Honour had unconscionable conduct in mind when she was making the findings at paragraph 92?

MR FOLEY:   That could well be so, your Honour, and, indeed, the use of the three concepts of duress, unconscionable conduct and undue influence are to some extent coexistent throughout the course of the judgment, although her Honour relies principally upon duress.  But the observation that your Honour made about the time pressure ‑ about the contents of section 95 are characteristic of the illegitimate pressure necessary to constitute unconscionable conduct and the provision in section 92 dealing with “every bargaining chip and every power” being in the respondent’s hands similarly echoes the concepts of unconscionable conduct.

To some extent, the appellant’s case has an embarrassment of riches in that it is our respectful submission that it could fit into the category of duress.  It could fit, perhaps more easily and comfortably, into the category of undue influence or it could fit into the unconscionable conduct category and those concepts have been discussed and the distinctions drawn by Justice Deane and former Chief Justice Mason.

KIEFEL CJ:   Unconscionable conduct sometimes overlaps with the other categories, but perhaps the most important thing is to identify what you say arises – the findings that you are relying upon and what you say they mean in relation to these categories of cases where relief is given.

MR FOLEY:   Yes, your Honour.  Well, so far as duress is concerned, it is submitted that the will of the appellant was overborne.  The nature of the threat of not proceeding with the wedding so late in the piece may be said to be a lawful act at one level but it constitutes a legitimate pressure because it was unconscionable in the circumstances given the background of events, the emotional dependency – emotional and financial dependency of the appellant upon the respondent given that there is a finding of fact that ‑ ‑ ‑

KIEFEL CJ:   How do you say that the emotional dependency to which your Honour refers arose?

MR FOLEY:   Well, it arose because these parties had been courting, had lived together.  The respondent, the late husband, had paid for everything for some six months or more.  The appellant was residing in the appellant’s penthouse.  Significantly, there is a finding of fact that the appellant was in love with the respondent and that has echoes of Louth v Diprose where love sickness was held to be a special disability in a case which even turned the heart of a male lawyer, so it is a case that reviewed some of the earlier concepts.

So, so far as the duress is concerned, we respectfully submit, number one, that the pressure was illegitimate given the timing; two, that as to causation of the – with proceeding to sign the agreements, there was no reasonable alternative and, indeed, her Honour made such a finding of fact in her Honour’s trial judge’s finding.  So the ‑ ‑ ‑

KEANE J:   There is certainly no suggestion at all, is there, that he – when he said, you know, you sign or there is no wedding, there is no suggestion that he offered to give her an alternative by paying for her to – and her family, I suppose, to go home?

MR FOLEY:   Quite so, your Honour.

KEANE J:   So that in the circumstances it was – it really was literally my way or the highway.

MR FOLEY:   Quite so, your Honour, and indeed at paragraph 89 – I think I said 48 before, paragraph 89 on appeal book 670, the learned trial judge said:

Indeed, I am satisfied that when Mr ‑ ‑ ‑

and then his name appears:

said there would be no wedding, that meant that the relationship would be at an end.

If I could take your Honours just through the next two paragraphs, because this highlights the emotional, financial and social pressure that was on her and the emotional, social and economic dependency which she had in her relationship with trust and confidence.  So when he said there would be no wedding that meant the relationship would be at an end.  The applicant wanted a wedding, she loved Mr – we will call him Kennedy – and wanted a child with him.  She had changed her life to be with Mr Kennedy.  That is to say there was a reliance upon his love and affection which resulted in a change in her life.  It goes on in paragraph 91, line 3, to say that:

If the relationship ended, she would have nothing.  No job, no visa, no home, no place, no community.  The consequences of the relationship being at an end would have significant and serious consequences to Ms [Thorne].  She would not be entitled to remain in Australia and she had nothing to return to anywhere else in the world.

GORDON J:   So is your position that we take in a sense not just the critical findings at 92 to 95 but take into account the additional matters set out from, in a sense, 88 onwards?  That is, if you look at the history it starts, in a sense, before your client comes to Australia.

MR FOLEY:   Yes, your Honour, yes, because that led to the relationship of trust and dependence which characterises the undue influence cases and it forms a background for the great force of the threat which might not be unconscionable were it six or eight months out from the proposed wedding. 

KEANE J:   It might not be unconscionable if she were not here in Australia at his behest in circumstances where she does not have the wherewithal to go anywhere else.

MR FOLEY:   Exactly, your Honour.  Indeed, in one of the passages in the Radmacher decision of the UK Supreme Court they refer to some guidelines that were issued by the Home Office.  I do not mention them as anything more than that, but the guidelines say that “ante‑nuptials”, as they are called there, or prenuptials, should be done no less than 21 days before the wedding, they say for the obvious reason that that tends to lessen the force of the threat of withdrawal. 

But in this case that threat took place against a background where the appellant had come to Australia, had taken up residence, had fallen in love, had wanted to have a child with the respondent, so it was found.  Her parents had been flown out from the home country in eastern Europe, accommodated by the husband.  Her sister had been flown out, accommodated by the husband.  The invitations had been sent out.  The wedding dress had been purchased.  And it was at that point, and that point only, that the terms of the agreement were presented to her, on 20 September, 10 days before the wedding.

GORDON J:   As well as the first time that she knew of his true financial position.

MR FOLEY:   Yes, your Honour, that is so.  It is correct, as the trial judge found, and as urged upon the court by the respondent, that the respondent husband had said to the appellant that his money was to be for his children, but that has to be understood in the context of his promises also that his money would be for her.  Those two alternatives are not mutually exclusive; it is a false dichotomy to say, well, he had said the money was for the children, so there you have it.  Even the terms of the agreement themselves provide for both. 

He had a duty to provide for both and he did so, but in answer to his Honour Justice Keane’s question, the timing so late brings the element of unconscionability into it.  But that takes place – unconscionability or indeed duress – because if Justice McHugh’s view of unconscionability is correct and if the view of the Privy Council is correct then duress may be constituted even when there is not an unlawful act, contrary to Karam’s Case, but where there is unconscionable conduct.  Indeed, in the book to which I have referred, of Justice Edelman, Unjust Enrichment, there is some discussion to which I will take the Court a little later, if time permits, of the ways in which these concepts have been used somewhat differently in different cases.

But in this case, in answer to your Honour the Chief Justice’s question ‑ how does this stack up in terms of duress, undue influence and unconscionable conduct? – for duress there is the illegitimate pressure constituted by the threat.  The causation is pretty obvious because there is no reasonable alternative.  I am not suggesting that causation necessarily requires no reasonable alternative and, indeed, Justice Kitto made the observation whether there were alternatives freely chosen rather than no reasonable alternatives.  But in this case she had no other options.  So that, in my respectful submission, is the short version of the written submissions on duress.

BELL J:   Your submission is that duress is established where there is what you characterise, in reliance on Justice McHugh’s analysis, illegitimate pressure.  Here you say the illegitimate pressure is the respondent’s unconscionable conduct.  I have some difficulty seeing what in the circumstances it adds to the analysis, if you be right, that the appellant engaged in unconscionable conduct, where the duress analysis gets you.

If one looks at the Full Court, at appeal book 712, at paragraph 138, their Honours deal with the question of the claim insofar as it was based on unconscionability and they accept that the wife was in a position of special disadvantage and assert that the evidence did not support a finding that the husband took unconscionable advantage of it.

Now, you challenge that analysis, and it seems to me you need to succeed in your challenge on that analysis to make your duress argument good on the basis that the husband’s conduct was unconscionable in giving rise to illegitimate pressure.  I come back to the point:  do you need to go that far if you are right that the husband took unconscientious advantage of the special disadvantage that the wife was in?

MR FOLEY:   I respectfully concede the proposition advanced by Justice Bell.  There is a duplication of the argument that, in order to prove duress, one must prove either the unlawful act or that the pressure was illegitimate, according to Justice McHugh’s test or the Privy Council test by unconscionable conduct.  So it might be said, well, if you have to prove that, why not just rely upon unconscionable conduct?  I make these submissions because that was the basis upon which the learned trial judge decided the matter on duress and, in my respectful submission, she was entitled to do so.  But I accept what your Honour ‑ ‑ ‑

BELL J:   Her Honour characterised duress as a subset of unconscionability.

MR FOLEY:   Yes, that is so.  The nature of the pressure must have regard to the circumstances in which the parties found themselves.  That picks up many of the principles of undue influence; namely, the relationship of trust and confidence, the emotional dependence, the financial dependence, love.  It is said, for example, that that cannot arise because she was not concerned about the separation agreement; she was concerned about the testamentary.  But that is to miss the point.  The reason she was not concerned, so the trial judge found, was that she did not think the question would arise; she thought it would arise only if she left him. 

That sort of blindness is characteristic of love.  It is also a characteristic of persons who are in a state of emotional or economic dependency, particularly emotional dependency in the traditional categories of presumed undue influence, and in this case we say in what on the evidence is actual undue influence of a striking and powerful kind. 

So, in answer to your Honour Justice Bell, we do say that ‑ and challenge the observations of the Full Court ‑ we respectfully submit that the ear of the Full Court was deaf to the voice of conscience of equity, that it proceeded on the wrong principle that the principles derived out of commercial contract should be applied, in our respectful submission, uncritically to contracts between persons who are parties to a relationship of mutual support and confidence ‑ in this case, marriage.

It is common ground that relationships between fiduciaries, for example, bring with them special duties.  So too, relationships between parties to a marriage fall into that category to which I adverted involving, to quote his Honour Justice Kitto, for mutuality and social responsibility within the framework bequeathed by Chancery.  One simply cannot apply commercial tests for duress in the absence of the equitable considerations that arise out of the nature of mutual support and maintenance relationships such as that of marriage.

GAGELER J:   Mr Foley, could I ask you a factual question?

MR FOLEY:   Yes, your Honour.

GAGELER J:   At page 670, paragraph 91, the last sentence, it says:

She would not be entitled to remain in Australia ‑

I take it that refers to her visa status.

MR FOLEY:   Yes.

GAGELER J:   And then it says:

and she had nothing to return to anywhere else in the world.

Now obviously that cannot be taken literally.  What does it mean, that “she had nothing to return to anywhere else in the world”?

MR FOLEY:   It meant, in short, that she had left her home in that country in eastern Europe.  She had been working in a low paid position in that country in the Middle East and she had little in the way of economic or social prospects of resuming life in those countries, particularly in circumstances where she had fallen in love and wished to have a baby.  Indeed, the evidence indicates they went and they tried IVF after they ‑ because she was marrying.  In effect, she had burned her bridges and made a life changing decision to be with the husband, in reliance upon his repeated assurances to which I have referred in the material that he would support her for her life, that being the circumstance in which she found herself.

If I might come back to those pages to which her Honour the Chief Justice took us in appeal book at 670 and 671.  The proposition I urge upon the Court is that those are extraordinary findings of fact upon which a court might make its decision.  Much of the respondent’s arguments in this case turn on, in my respectful submission, dubious assertions of fact which depart from the trial judge’s findings.

I have mentioned the proposition that “my money is for my children”.  In my respectful submission, that is based on the false dichotomy regarding the disposition of the husband’s assets between 18 million and 24 million.

GORDON J:   I understood that to be a proposition that there was a failure to differentiate between distribution of wealth and maintenance ‑ that is, I thought the proposition you were seeking to make, if I have it right, is that yes the wealth would be for the family but that she would be looked after.

MR FOLEY:   No, your Honour.  The proposition is that the wealth, so far as it was relevant, would be for both but it was clearly principally for the children.  Indeed, if one looks at the testamentary provisions, they are much more generous to the wife on property distribution, but then that was – perhaps if I take the Court to the evidence on that point.

KIEFEL CJ:   Do you have a finding of the primary judge on this question?

MR FOLEY:   Not one I can point to.  I think the short answer to that is no but the long answer is that – well, the primary judge did make the finding that the husband had said that it would go to the children but there is no ‑ ‑ ‑

KIEFEL CJ:   The primary judge appears to accept the evidence of the solicitor, Ms Harrison, that the appellant was not so much concerned about testamentary dispositions as she was about maintenance.

MR FOLEY:   Well, if I could go to appeal book 663, paragraph 57, in dealing with Ms Harrison’s advice at about line 5 – this is dealing with the second agreement that was entered into:

Again the wife thought that the agreement would only take effect if she left her husband and that as she was never going to do that she wasn’t concerned about that issue but remained concerned about what provision would be made for her in the event that her husband predeceased her.

The two propositions that I draw from that are that her mistake as to the effect of the separation provisions is a mistake characteristic of undue influence and love blindness and she proceeded, perhaps naively, on the proposition that that was not going to happen because she was not going to leave her husband.  That, in my respectful submission, is a classic paradigm of undue influence.

GORDON J:   I think the passage that I was having regard to is at 652, about line 42, where the trial judge seems to accept your client’s position that she understood that the respondent:

need to ensure that his children’s financial position was protected, and that her concern was, not what would happen to her financially while her husband‑to‑be was alive, but, as to what would happen to her financially if he died without making proper provision for her ‑

MR FOLEY:   Yes, your Honour.

GORDON J:   Which seems to extend to the question of maintenance as well.

MR FOLEY:   It goes to both but it is certainly not isolated to maintenance because of the 50,000 that was provided after three years, pursuant to the agreement, only 10,000 of it was for maintenance.  Indeed, in the course of the special leave hearing, it was conceded that – I will get the exact wording so that I can quote it correctly.

KIEFEL CJ:   There is a reference at appeal book 668 and 669, paragraphs 80 and 81, to the solicitor’s evidence that “the testamentary provisions were at the forefront of” the appellant’s mind, to the extent that they contained protection for her from the estate.  That does not necessarily imply a large settlement of property but rather some form of continuing maintenance and that would seem to fit with what was said at paragraph 81, that she did not seem so concerned with separation provisions because she thought that provision was made for her while they were together and they were always going to be.

MR FOLEY:   That is so, and the application that was filed in this Court, or in the Federal Court Circuit, was if I recall 1.1 million for property settlement out of the 18 to 24 million and I think 104,000 for maintenance.  So it was a modest proportion of the overall matrimonial pool, and so far as the maintenance component in the agreement is concerned, his Honour Justice Keane, in the special leave application, posed this question to senior counsel for the respondent ‑ reading from the bottom of page 12 and the top of page 13 of the special leave hearing, his Honour said:

In relation to that, there is no suggestion, is there, that these agreements which provided for the wife to get $50,000 after three years should the relationship break up then, there is nothing to suggest that that was somehow calculated to reflect a genuinely held view of what would be sufficient to support her in her circumstances in that event.

To which senior counsel for the respondent answered:

That is so, your Honour, and that is so and, indeed, that is the intent if I can put it that way, of the provisions which were brought into effect in 2000, namely, to enable people to contract in a manner which they chose which might be entirely different from and, indeed, in this case, as your Honour quite correctly says, in respect of the separation provisions was, but what the intent of the amendments is is to enable people to do that, to do that very thing and to do that very thing without necessarily having regard to what it is that they might achieve ‑

That is a slightly different point.  While we are dealing with the maintenance question, it is a very important concession by the respondent because it indicates that this agreement did not even purport to represent proper maintenance for the wife from the outset and when we come to section 90F and the effect of that on public policy, I make the point that that is, with great respect, not the intent of the legislation and it contrasts with the provisions under Part VIII, as it were the pre‑existing provisions, where orders made by the Court must be proper orders – a proper order.

Section 72 confers the right of a spouse to have maintenance; section 74 empowers the Family Court to make a proper order for maintenance and section 75 sets out the criteria to which the Court should have regard, and this is part of the problem upon which the question of equity and the question of a statutory interpretation depends because what was urged by the respondent is that it is not necessary to have regard to what is proper.  This is for the parties themselves to determine that is the intent of the legislation ‑ essentially, if I might characterise it, a laissez faire argument.

To the contrary, I respectfully suggest that the nature of the relationship between the parties being one of mutual support and maintenance is such that the parties are at liberty but should act in accordance with that for which maintenance is intended, namely relevant support, and to the extent it does not do so it should alert the conscience of the Court to whether such an arrangement was obtained under undue influence, unconscionable conduct or duress.

It is not, as it were, for the Court to completely refashion the agreements that parties make.  Section 90KA makes it plain that these principles of law and equity for setting aside agreements are to be done in accordance with the principles of law and equity applicable to contracts, but in my respectful submission those principles differentiate significantly between that which is appropriate to parties in a special relationship such as fiduciary, or in this case mutual support and maintenance characteristic of a marriage, and those parties who are in the marketplace where, to go back to that article of his Honour Justice Keane, equity has been reluctant to intervene in the commercial marketplace for reasons which are set out in detail at the meeting.

EDELMAN J:   You are not suggesting, as I understand it, that there is some special category of marriage or pre‑marriage or anything like that; your submission is that there are relevant circumstances that one takes into account in applying the principles and that the principles do not themselves change but the circumstances need to be taken into account.

MR FOLEY:   That is so, your Honour, and I respectfully submit there is a further dimension to this argument in that those principles of law and equity which apply generally to the law of contract will be enlivened particularly in the case of contracts between parties who are in a relationship of trust and dependency or fiduciary relationships as opposed to those in the commercial marketplace.

In making that submission I do not submit it as a radical or new proposition. In my respectful submission, it is as ancient as the law of equity, but the dimension of marriage does have public policy and statutory duty prescriptions that are peculiar to marriage. In particular, section 43 of the Family Law Act imposes a statutory duty on the Family Court to have regard to the institution of marriage as an institution of people for life.

Now, these agreements are defined as a matrimonial cause under the Family Law Act.  They are made in accordance with the federal power of the Commonwealth, so they are a matrimonial cause.  In answering your Honour, I am mindful of the clear provisions in section 90KA that setting aside or the validity of these ‑ the validity and enforceability of them, or setting aside of these agreements are to be determined in accordance with the principles of the law on equity.  But my respectful submission is that the law of equity has required for centuries that regard be had to the marital status.

Now, we are at a turning point in property law in marriages.  The legislature has decided to move to a contract‑based - or to allow people to move to a contract‑based provision under Part VIIIA, but far from diminishing the impact of equity that, in my respectful submission, enlivens the courts to pay close regard to vitiating factors arising from equitable principles because up until 2000, up until the brave new world of 21st century marital contracting, all these events - the court might have regard to them and to explicit and implicit agreements between the parties, as her Honour the Chief Justice referred to in Stanford’s Case along with the former Chief Justice, Chief Justice French, but at the end of the day it was a matter for the court.

So with that protection taken away it is all the more vital that the traditional protections of equity for the disadvantaged and for the vulnerable and for the dependent should be enlivened.  So, in answer to your Honour Justice Edelman’s question, we do respectfully rely upon traditional equitable principles such as that in Louth v Diprose of circumstances where courts will intervene in the case of undue influence or unconscionable conduct.  We do not submit that this is a radical departure, but we do submit that it is quite wrong to proceed as if those principles of equity were somehow repealed by the 2000 amendments in the manner that has been urged upon the Court by my learned friends.

As for the special nature of it, one looks at, as it were, the history and nature of the marital context of financial agreements and as I deal at Part 15 of my - paragraph 15 of the written outline of oral argument.  This is set out in greater detail in some of the historical references included in the written submissions and, in particular, in the UK Supreme Court decision of Radmacher.  A canon law marriage was and is a sacrament.  At common law marriage is both a contract and a status. 

I might just read a passage from Lady Hale in the dissenting judgment, although she agreed on many aspects, but her statement as to the public policy of marriage – and it is instructive to turn it up – it is in the appellant’s bundle at pages 31 to 92 at page 72.  That is 72 in the bundle; 575 in the Appeal Cases reports.

KIEFEL CJ:   That is the case of Granatino v Radmacher [2011] 1 AC 534.

MR FOLEY:   Yes, your Honour, thank you.  So, in an attempt to answer with greater authority his Honour Justice Edelman’s question about the special nature of contracts in the marriage, I point to what Lady Hale said - reading from paragraph 132:

The issue may be simple, but underlying it are some profound questions about the nature of marriage in the modern law and the role of the courts in determining it.  Marriage is, of course, a contract, in the sense that each party must agree to enter into it and once entered both are bound by its legal consequences. But it is also a status. This means two things. First, the parties are not entirely free to determine all its legal consequences for themselves.  They contract into the package which the law of the land lays down.  Secondly, their marriage also has legal consequences for other people and for the state.  Nowadays there is considerable freedom and flexibility within the marital package but there is an irreducible minimum.  This includes a couple’s mutual duty to support one another and their children.

I refer to this not simply - obviously the legislative framework is different there.  At the time of this case – and I think still – but in any event, certainly at the time of this case, the significance of this case was that the majority held that financial agreements were no longer contrary to public policy - no longer void as contrary to public policy.  But they did in…..summarise a little bit of that in the written submissions – they did deal with the concept of mutual support.  That is a very different concept from buying a bale of hay or buying an iPhone.

GORDON J:   Do you need to go that far, Mr Foley, though, in this sense?  The enactment of Part – which now permits these sorts of contracts contains within it in itself, does it not, the protection mechanisms, that is, not only a reference to equitable concepts which you have taken us to already, but also 90F which permits a court to make provisions so that someone is not left reliant on the government.  Is that not enough for you?  You do not need this sort of analysis, do you, to get to establish if you are right about the facts and the application of the facts to unconscionable conduct or some other form of equitable relief?

MR FOLEY:   Your Honour may well be right but ‑ ‑ ‑

GORDON J:   Or I may not be.  I just do not understand why we are ‑ ‑ ‑

MR FOLEY:   I do not know what is enough for me so I am putting my client’s case ‑ ‑ ‑

GORDON J:   But I am asking you by reference to the way in which you have put it.  We have particular findings of fact which you have relied upon.

MR FOLEY:   Yes.

GORDON J:   You have sought, as I understand, to explain to us how those findings are sufficient for the purposes of one of the mechanisms built into the Act.

MR FOLEY:   Yes.

GORDON J:   Do we need to overlay it with this additional layer?

MR FOLEY:   Well, is there a need for braces when there is a belt?  No, but I rely on it in addition to it because, in my respectful submission, it goes to the history of the law of equity and it goes to which way the courts are going to go.  Is this brave new world to be characterised by the courts retreating from equity or by the courts being particularly alert to the equitable problems likely to arise once freedom in the marketplace enables the rich to gain control over the not so rich?

KIEFEL CJ:   But your reference to Baroness Hale in the case to which you recently referred is by way of referring us to her Ladyship’s identification of large issues which arise about these questions, about the mutual duty of support and whether there is an irreducible minimum and the like.

MR FOLEY:   Yes.

KIEFEL CJ:   But she had in mind that - what she seemed to be concerned to discuss was that these are matters for law commissions who can look into it and at paragraph 136 she was at pains to point out that:

These difficult [large] issues cannot be resolved in an individual case –

and yet you want to spend the time asking us to do it when you have an agreement, you have statutory provisions which say that they may be set aside upon certain grounds and the judge has approached it in that way and the Full Court has dealt with it, about whether or not they come within the categories for which the law – the equity provides.  To repeat Justice Gordon’s inquiry of you, why are we going into this area and if you are going to spend time discussing these large, wide principles, what is the answer we are supposed to apply?

MR FOLEY:   I accept the force of your Honour’s argument of course, and I am mindful that the Attorney‑General in fact three months ago today foreshadowed a referral to the Australian Law Reform Commission.  It has not yet, on my understanding, received final terms of reference regarding the family law system.  The significance of these larger issues is that they tend to rebut the laissez faire arguments which have been advanced by the respondent and upon which, in my respectful submission, the Full Court of the Family Court based its ‑ ‑ ‑

KIEFEL CJ:   But I thought you had already made your submission.  You have said that cases which are concerned with duress in a commercial context are not applicable to a circumstance such as this.  That is a factual – that is a call to a particular understanding of a factual scenario with emotions involved with people.  I think we understand that submission.

MR FOLEY:   Yes, your Honour.  I will move on.  I am just checking – in the course of argument I think we have dealt with many of the matters that appear from paragraph 8 onwards, on the findings of fact.  Perhaps if I go to paragraph 11 and take the Court to page 720 of the appeal book at paragraph 167.

GORDON J:   Sorry, I missed that reference, Mr Foley.  Could you give that again, please?

MR FOLEY:   I am sorry, appeal book page 720 and paragraph 167.

GORDON J:   Thank you.

KIEFEL CJ:   You pointed out in your outline of argument the concession made by the respondent.

MR FOLEY:   That is so.

KIEFEL CJ:   Independent legal advice can never overcome a case of undue influence, duress and perhaps not even unconscionability.

MR FOLEY:   Particularly when it is not followed, and I advert in my written submissions to an article by Justice Paul Brereton which analyses those propositions and which ‑ ‑ ‑

KIEFEL CJ:   Well, you say particularly when it is not followed.

MR FOLEY:   Yes.

KIEFEL CJ:   The appellant’s solicitor’s statements made more than once that she was concerned that she was not following it because in effect the appellant had no choice ‑ ‑ ‑

MR FOLEY:   Yes.

KIEFEL CJ:   Might be a factor very much in favour of the appellant’s case.

MR FOLEY:   Quite so, your Honour, quite so and, indeed, Justice Brereton adverts to that in that article.  In my respectful submission, there is a fundamental error on the part of the Full Court that appears in that paragraph 167 where, after analysing the question of duress, their Honours observe:

However, the real difficulty for the wife in establishing duress is that she was provided with independent legal advice about the agreements, she was advised not to sign them, but she went ahead regardless.

That is, with respect, to miss the point and that appears to be a determinative factor in the reasoning of the Full Court because it refers to it as the real difficulty.

KIEFEL CJ:   You say it assumes real choices were available?

MR FOLEY:   Yes, your Honour.  But, even just as a proposition of law, it does not follow that the provision of independent legal advice of its nature, of itself, cures any undue influence.

EDELMAN J:   But your point is really stronger than that.  Your point is that, in the circumstances described in paragraph 167 where independent legal advice is provided and she is advised, particularly in strong terms, not to sign the agreements but she goes ahead regardless, that can be - rather than detracting from duress or undue influence it can be a strong indicator that there is duress or undue influence.

MR FOLEY:   Exactly, your Honour - your Honour expresses it eloquently.  I will deal – and I am at paragraph 12 of my written outline of oral argument - with the handwritten amendments.  This is relied upon by the Full Court.  If I could go back to the findings of fact at pages 694 to 696 – I am sorry, the findings of fact by the trial judge, the passage which your Honour the Chief Justice took the Court in argument some time ago at page 670, paragraph 89.  There was a finding of fact that:

The husband did not negotiate on the terms of the agreement as to matters relating to property adjustment or spousal maintenance.  He did not offer to negotiate.  He did not create any opportunities to negotiate.

Now, that was a very strong finding of fact.  The Full Court dismissed appeal grounds 1 to 5 dealing with findings of fact and the weight of facts but it then went on to conclude that there was negotiation on the basis of some handwritten amendments which, in my respectful submission, are merely machinery or minor in nature and do not support the reasonable inference of substantive negotiation.

If I could take the Court to appeal book 568, there are virtually identical amendments in each of them.  This is the first agreement – this is prior to the marriage.  Your Honours will see at about line 20 on page 568 in paragraph 27(a) dealing with the effect of death after the words providing for her entitlement to receive things from the deceased’s estate:

A penthouse –

at the development mentioned there:

or if [that] development does not proceed –

and what is inserted is:

or if for any other reason the penthouse cannot be transferred to –

the appellant - just housekeeping, in my respectful submission.  Similarly, at paragraph 28, the husband:

hereby undertakes to execute a will and if necessary a testamentary trust –

again, housekeeping.

GORDON J:   I thought these amendments – I understood your argument that the amendments were dealing with what was to happen after death.

MR FOLEY:   Yes.

GORDON J:   And that it did not address the issue which has subsequently become the issue and that is what was to happen in circumstances where it was dealing with the position before death, i.e. maintenance.

MR FOLEY:   Your Honour Justice Gordon is ahead of me.  Quite so.  They deal with provision after death, not separation and, in any event, they are housekeeping.  It was an error, in my respectful submission – a fundamental error for the Full Court to conclude that this was evidence of negotiation.  It just was not, in our respectful submission.

I should deal with one of the other matters which is referred to at appeal book 731.  Their Honours in the court found that the senior counsel then representing the appellant had effectively conceded that there was a wrong application of the test of duress.  That is disputed.  We disputed that in our written submissions.  It does not appear to be, in the submissions of the respondent, agitated on their behalf but I rely upon it as an error on the part of the Full Court. 

I do seek leave to read the Auscript transcript of proceedings that were filed in this matter before the – it says “The Full Court of the Family Court” – that should be the High Court, the application – annexed to the affidavit of my instructing solicitors, Mr Carmont affirmed on 20 October.  That has been filed in the Court.  I do have multiple copies.  Somehow I note that it did not find its way into the appeal book.

KIEFEL CJ:   Is there a dispute about whether or not there was this effective concession referred to at paragraph 68 of the Full Court’s ‑ ‑ ‑

MR FOLEY:   I do not know, your Honour.  It has not been taken up in the respondent’s submissions, but I am not aware that they have formally conceded the point.

KIEFEL CJ:   Well, they are not relying upon it.

MR FOLEY:   No, but I am relying on it.  I am relying upon it as an error.

GAGELER J:   But the error goes nowhere of itself, does it?  I mean, it is no better than the legal point that is being made or conceded, as the case may be.  Assume they were wrong in their understanding of the making of the concession.  That in itself does not win you the appeal.

MR FOLEY:   No.

GAGELER J:   I am not sure you should be wasting your time on it.

MR FOLEY:   Yes, may it please the Court.  Anyway, perhaps I might reserve the appellant’s position until after I hear from the respondent as to whether they wish to ‑ ‑ ‑

KIEFEL CJ:   No reliance is placed upon it thus far, is it?

MR FOLEY:   No.  It is urged on behalf of the respondent that the second agreement does not suffer from the tainting or presumed undue influence of the first agreement between fiancés.  But, in my respectful submission, the second agreement is the fruit of a poison tree.  The first agreement obliged the appellant to enter the second agreement.  The trial judge found the second agreement on 20 November made under duress for all the original reasons except the time pressure of the impending marriage.

KIEFEL CJ:   Do you say that is why it was entered into?  That is the only purpose of it.

MR FOLEY:   Exactly.

GORDON J:   The husband rang, did he not, asking where she was, hurrying her up?

MR FOLEY:   That is right.

GORDON J:   So it had additional factors in addition to those in relation to the first agreement.

MR FOLEY:   Quite so, your Honour Justice Gordon.

KIEFEL CJ:   And she had lived with and been supported by him for a longer period by this time?

MR FOLEY:   Yes.  I have dealt with paragraph 15 of my outline, the marriage…..financial agreements.  We have dealt with that in the course of argument.  I think I have dealt with the section 90F point but the question is whether that is sufficient to constitute the necessary framework for the relationship of mutual support. 

In my respectful submission, there is a stark difference between the provisions of section 90F, which deal only with the bare minimum of keeping or protecting the public purse from someone on a pension and an assessment of maintenance which is proper.  I dealt with that and I trust that it is - as for the marital context to which I referred in answer to his Honour Justice Edelman’s provision I quote from the transcript of the special leave hearing in this matter on 10 March where his Honour Justice Keane asked senior counsel for the respondent:

In relation to that, can I just ask you, do you say, as Mr Foley says, the Full Court in this case has said that so far as the operation of these principles of unconscionability, duress, undue influence are concerned, in the provisions relating to these agreements in the Act, that there is nothing special about marriage; there is nothing special about the context in which they are required to operate?

Answer:

There is nothing special per se about marriage, nor indeed, your Honour, could there be said to be, because the provisions of these agreements operate to relationships which are not marriages.

The appellant submits that there is something special about marriage but pursuant to the ‑ ‑ ‑

KIEFEL CJ:   I thought you had dealt with this question.

MR FOLEY:   If I could just maybe still add this proposition, your Honours.  So far as the application of the equitable principles in Yerkey v Jones are concerned that have been criticised as being out of date and the product of yesteryear, I respectfully rely upon the majority decision in Garcia’s Case where Justice Gaudron, Justice McHugh, Justice Gummow and Justice Hayne made the point that what his Honour Justice Dixon said in Yerkey v Jones reflected deep equitable principles properly understood.  Far from being superseded they may well be extended to same sex and opposite sex de facto couples.  In Yerkey v Jones his Honour Justice Dixon said that the marital relationship:

has never been divested completely of what may be called equitable presumptions of an invalidating tendency.

This is the majority in Garcia and far from scoffing at that adopted it.

KIEFEL CJ:   But the extension to which you refer in Garcia, is that simply to say that equity is conscious of the effects of relationships – the context of relationships more generally and how people may be dependent upon each other and the kinds of forces that work within relationships, whether or not they take the time to properly understand something that is being told?

MR FOLEY:   In my respectful reading of it, I respectfully agree with your Honour’s observation and ‑ ‑ ‑

KIEFEL CJ:   That is to detract from marriage per se as being the topic with which their Honours were concerned but relationships more generally.

MR FOLEY:   Indeed, they specifically refer in that passage from paragraph - on page 403 of Garcia onwards to it being based on an earlier decision of Justice Cussen in Bank of Victoria Ltd v Mueller on trust and confidence.  There are all those equitable cases of trust and confidence.  It is, at its core – and this reflects the view that your Honour the Chief Justice has just expressed – I am reading from page 404 of Garcia at about the end of paragraph 21:

It is, as its core, often a reflection of no more or less than the trust and confidence each has in the other.

As to ground four, the adequacy of reasons, I refer the Court to the test set out by your Honour the Chief Justice and former Chief Justice French in Wainohu’s Case about the duty to give reasons.  In my respectful submission the reasons given by the trial judge were adequate.  The findings of fact were comprehensive and it certainly enabled all the parties to exercise their respective rights of appeal and left the parties in no doubt as to the factual basis. 

To the extent that there are any ambiguities in expression of “concepts of duress, unconscionable conduct and undue influence” it is, as

Justice Edelman observed in his book, the second edition of last year, characteristic of some ambiguity on the part of a number of courts.  But, in my respectful submission, one should also take into account the provision that I have mentioned in the Federal Circuit Court Act about the duty of the Court to act with as little formality as possible.  That does not extinguish the duty to give reasons.  In my respectful submission, that duty was well and truly discharged.  They are my submissions, your Honour.

KIEFEL CJ:   Yes, thank you, Mr Foley.  Yes, Mr Lethbridge.

MR LETHBRIDGE:   At the point in time, your Honours, that the appellant placed her profile online in 2006 she was 36 years of age.  The evidence disclosed that she had been married before – married at the age of 19.  She had been divorced.  She had left her country of origin and moved to a new country where she had been in a relationship of some four years’ duration which itself had failed. Your Honours will find that information at appeal book page 428. 

The point we make is that while it is true that she was a young woman, she was at the time a mature young lady.  She had had a life experience which included the pitfalls of a broken relationship and a failed marriage.  When she met the respondent it was plain, as the trial judge found, that the circumstances of that meeting were such that it was always an agreement and a significant term of the agreement that the respondent’s wealth would be retained for his children and that she would be required to sign an agreement to that effect before any marriage took place.  That, as your Honours have seen, was found to be the finding of the trial judge which she outlines at page 652 of the appeal book:

[Mr K] was at pains from the outset to make it clear to [Ms T] that his wealth was his, and he intended it to go to his children.  [Ms T] was certainly aware of that position from the outset.

She goes on to say, towards the bottom of paragraph 35:

It seems to me more likely than not that [Mr K] was the first to introduce the notion of a document being needed to be signed and that [Ms T] was keen to acquiesce.  I accept [Ms T]’s position that she understood [Mr K]’s need to ensure that his children’s financial position was protected, and that her concern –

and in our submission this is significant, your Honours:

was not what would happen to her financially while her husband‑to‑be was alive, but, as to what would happen to her financially if he died without making proper provision for her in his Will.

That, your Honours, will find, flows directly from the evidence that [Ms T] gave.  That is to be found at page 428 of the appeal book.  If I could just take your Honours to that evidence because, in our submission, it is important for a number of reasons.  The appellant, having referred to the meeting and her online profile says this – page 428, paragraph 25:

We had daily conversations in a mixture of Greek and English through Skype.  In those conversations he said words to the following effect:

He said, “I will come to [the country as noted] and we will see if we like each other.  If I like you I will marry you but you will have to sign paper.  My money is for my children”.

I said, “I agree but when you die I will be alone and where will I live?  I do not want to be on the street.  I am not educated.  How can I survive, I need a home and money to live.”

He said, “I understand.  I agree with you and I will provide you with a house, car and money.  I will keep you safe all your life.  I am a rich man.  When I come to [the country] I will look after you.”

Indeed, in our submission, that is precisely what the respondent did and it is precisely what the agreement provided for.  He commenced to perhaps address a question of the position of the appellant at the point in time that she signed the agreement.  He commenced, as your Honours will see, on being requested to provide her with money – paragraph 36, page 429:

I asked for $2,000 per month and [he] agreed.

If your Honours go across the page – prior to coming to Australia, the appellant had a discussion with a friend of hers and she says this – page 430, paragraph 45:

I asked [him] for $15,000 to be paid into my personal account.  I said:

“This will allow me to purchase another vehicle and cover my living expenses”.

[He] agreed.  He said words to the effect:

“Maybe we should have a joint account”.

I refused.  He deposited $15,000 into my HSBC account paid by cheque. 

By the time that the appellant had reached Australia she was in receipt of the monthly stipend which continued prior to the marriage.  That had been increased, as your Honours will read, to $4,000 a month.  She was, in our submission, in no sense bereft of any financial capacity whatsoever.  Additionally, she of course owned property, albeit not great property, but property in her country of origin and that is referred to in the agreement itself.  But that was of course by no means as significant as the respondent’s position.  But certainly it was a fact. 

So, if, your Honours, we come to circumstances in which the agreement was signed and the trial judge is dealing with those circumstances your Honours will see that, true it is, that the agreement itself was provided to the appellant only a few days before the relationship, before the marriage, but it was an agreement which in effect addressed all of those factors that the appellant herself was concerned about. 

It provided for her to receive maintenance during the course of the relationship.  It was not by any sense a fixed figure other than that it would be $4,000 per month.  It provided that she would have the occupation of a penthouse.  It provided that accommodation would be found for her parents and she was provided with the benefit of the use of a motor vehicle. 

All of those things were things which, when the appellant was concerned about maintenance, were the things which concerned her because in her perception, as was the evidence of the instructing solicitor that she saw, she was not concerned about separation.  She did not perceive that to be a factor that would arise.

EDELMAN J:   Why are her concerns relevant to issues such as undue influence or unconscionable conduct?  If the concern of those doctrines is to protect or to act in a prophylactic way then why would the doctrines be concerned with what a particular party, who may be suffering under a special disadvantage or may be subject to undue influence, wanted?

MR LETHBRIDGE:   We would contend, your Honour, because unless your mind is directed to the loss that you now perceive you have suffered, at the time in which the agreement is entered into, you cannot be in a situation of duress at that point in time.

GORDON J:   But, the loss here or counterfactual was marriage – end of relationship.

MR LETHBRIDGE:   That, your Honour, was a factor that we would contend had always been a crucial and fundamental proposition about which the appellant was aware from the point in time she met the respondent.  So it was always his position that there would need to be an agreement.  The terms of that agreement were certainly open, we would contend, to some negotiation.  But his position was not that the terms were closed but rather that the agreement had to be signed. 

That was something that we contend, accepting the appellant’s evidence, was something about which she was aware from the very point in time they met and as she says in her own evidence she was prepared to agree to.  So that when one comes to the agreement itself it was not the fact of the agreement.  It was the terms of the agreement that are the terms she now complains about.

EDELMAN J:   This point really is a causal point rather than a point about whether she is suffering from any special disadvantage or undue influence or duress.  The point is, even if she were suffering from any of those positions, in any event or but for that, on your submissions she got everything that she would otherwise have asked for even without any of those disadvantages.

MR LETHBRIDGE:   That is so, your Honour.

EDELMAN J:   Is that the right test for causation?

MR LETHBRIDGE:   It is a test that is appropriate in the circumstances of an agreement of this type because inherently these agreements are agreements which will – if the benchmark is a provision of the Family LawAct - take the rights of the party out of the Act itself.  Whilst I am loathe to make the submission in this way these are agreements which, when they fall to be effective will always, or almost always, provide an outcome about which one of the parties to the agreement has agreed.  That in itself, we would contend, is a significant factor.

So that if one then comes to a bargain and gets, within the bargain, precisely or effectively what it is that that party is wanting, irrespective of the circumstances in which that bargain is entered into, it cannot, in our submission, be by reason of the application of an illegal – an illegality, nor can it be as a consequence of unconscionable behaviour.

EDELMAN J:   But, that is because you are applying a “but for” test to this question of “by reason of or as a consequence of”.  If one applied a different test such as whether or not it was a contributing factor or whether the special disadvantage or the undue influence was a factor in the decision‑making process, then one might come to a different conclusion.

MR LETHBRIDGE:   Yes.  The parties were in the circumstances of this case, we would contend, free agents in the sense that while there were factors which in the mind and as found by the trial judge went to the question of whether or not the marriage would take place, the circumstances in which the respondent then found herself were such that she was aware from the outset that that would not have taken place unless the agreement was signed, and her complaint, it would seem to this side of the Bar table, is that “although I did not comprehend or contemplate at the time the agreement was entered into the eventual events that I now complain about, the respondent must bear a responsibility for failing to provide better in those circumstances.  We challenge, as the Full Court found, the proposition that the respondent was not prepared to negotiate.  He was prepared to negotiate.

KIEFEL CJ:   Where is the evidence of that?

MR LETHBRIDGE:   If I could take your Honours to that.  The starting point I am bound to take your Honours to is at page 312 of the appeal book and that is from the evidence of the solicitor and I take your Honours to this because it would seem to be where the trial judge obtained her conclusion that there was no refusal – no desire to negotiate.  If your Honours go to page 312, this is evidence given by Ms Harrison, the solicitor for the appellant, and she is speaking here of the occasion on which the appellant attended her offices with respect to the first agreement, and she says at about line 20:

You wrote to [Mr Jones] in relation to the first agreement in my words “expressing concern about duress”?‑‑‑Yes.

. . . 

When he did so . . . it seems to indicate that he thought ‑

This is Mr – I am sorry, the respondent.

KIEFEL CJ:   I am sorry, where are you?

MR LETHBRIDGE:   Line 20.  And I take your Honours to this because it was reported to Ms Harrison that the respondent had said to a person within her firm or associated with her firm, as your Honours will see at line 25:

“There will be no changes to the agreement.”

That is the agreement as originally provided.  But, of course, your Honours know there were changes to the agreement.

KIEFEL CJ:   Is that what you rely on, the fact of the changes?

MR LETHBRIDGE:   No, I take your Honours to that position because it is against me and I am obliged to tell your Honours where I believe the trial judge found her conclusion that there was no capacity, there was no negotiation.  It is that paragraph I believe because that is the only paragraph and the only evidence which goes to the question of negotiations with respect to the terms of the agreement.  But we know what did occur was that Ms Harrison spoke to an operative of the respondent’s lawyers and changes were made, and if your Honours go to firstly the evidence given by the solicitor for the respondents, and your Honours will find that at page 371, where at the bottom of the page preceding line 45 Mr Kearney puts this proposition:

[Mr K] has given evidence that the provisions made in the agreement, as far as he was concerned, were non‑negotiable.  That’s his evidence.  Did he communicate that to you or to Ms Seaton, to your knowledge?

GORDON J:   I am sorry, what page is this?

MR LETHBRIDGE:   Page 370 of the first appeal book, your Honour.

GORDON J:   Thank you.

MR LETHBRIDGE:   At line 45 it commences and goes across to page 371.  This is a proposition advanced to the solicitor for the respondent and the solicitor answers:

Well, I can’t comment in relation to Ms Seaton and I don’t recall her ever having said to me that they were [his] instructions . . . And I – the only answer . . . But I didn’t ever receive instructions from him that he was not negotiable about any aspect of the agreement.

GORDON J:   That is very different though from there being some understanding between the two of them that there were to be negotiations, is it not?

MR LETHBRIDGE:   That is a different situation but when one comes to look at the agreement, your Honour, there were changes made to it and they, we would contend, were not superficial; rather, they were substantive in areas that concerned the appellant.  Indeed, if your Honours go to the letter which returned the agreement, and that appears at page 431 of the appeal book – 413, I am sorry ‑ your Honours will see at page 413 the letter returning the agreement which had had changes made to it:

The attached Agreement is subject to [Mr K’s] further instructions.  Whilst we have spoken to [Mr K] about the terms of the amended Agreement, he has not yet seen it.

Please let us know if [Ms T] requires any further amendments.

So that, whilst it is true that the husband at one point said, here are the terms, effectively, take it or leave it, that was not his instructions to his solicitors, that was not in fact what happened and, indeed, where terms were sought to be amended, those amendments were acceded to.

KIEFEL CJ:   Mr Lethbridge, none of that really answers the question, does it, of what her bargaining position was?  What did she have to bargain with?  The appellant was given the terms of an agreement a matter of days before a wedding, she is living in another country supported by someone and she is told even in that letter that it should be signed that day.  What does she have to bargain with?

MR LETHBRIDGE:   Firstly ‑ ‑ ‑

KIEFEL CJ:   He has not offered to fly her back to her country.  What is her position?

MR LETHBRIDGE:   Her position ‑ ‑ ‑

KIEFEL CJ:   You are talking about negotiations as if the exchange of words is going to be meaningful.  What is her bargaining position?

MR LETHBRIDGE:   Well, her bargaining position is that she has been in the country, she has been receiving a funding from the respondent, and while the respondent was firm in his view the issue is, looked back upon she could have said, no, I am not going to sign that in that form.  Her solicitor could have, in answer to the letter that was written, sent back a request for a different provision with respect to the separation.  But perhaps the answer to your Honour’s question flows from the fact that neither of the parties were in a circumstance at the time where their mind was focused upon what it was that would happen when the separation took place.

NETTLE J:   The husband’s plainly was, he put it in the agreement.

MR LETHBRIDGE:   Well, that is correct, your Honour, but the mind was not focused.  He was wishing to be married.  He wanted to make sure that his money was for his children.  But that was not something new.  That was something that the applicant had always known.

NETTLE J:   She had always known before – from the time before she came to Australia that if he decided to kick her out after a couple of years she would get nothing by way of maintenance.

MR LETHBRIDGE:   That specifically she would not have known, but ‑ ‑ ‑

GORDON J:   And in fact she was told that he would look after her.

MR LETHBRIDGE:   Well, in the context, your Honour, of their marriage subsisting.  There is nothing to suggest, in our submission ‑ ‑ ‑

GORDON J:   The whole of her life, it says.  It is the evidence you took us to.

MR LETHBRIDGE:   Indeed ‑ ‑ ‑

KEANE J:   He said.

GORDON J:   He said the whole of her life she would be looked after.

MR LETHBRIDGE:   Indeed, your Honour, in answer to it, if your Honour goes back to the quote, in answer to the proposition that they would be living together, “I will marry you”, you will be safe for the whole of your life.  It is a situation, in our submission, where neither of these parties contemplated the fact that the marriage would break down in any real sense.

BELL J:   But he made provision in that event and it was his determination that the marriage did break down.

MR LETHBRIDGE:   Absolutely, your Honour, and at the point of time – I am sorry, did I interrupt you?

BELL J:   No, well – no, do go on.

MR LETHBRIDGE:   At the point in time at which that issue was first raised, that is, a few days before the agreement was to be signed or the marriage was to take place, the circumstances were such that it was not a matter that was within the concern of the appellant and, indeed, in circumstances where, contrary to his statement with respect to negotiations, his instructions were not that there was no negotiation to be entered into.  In fact, there was negotiation.  Nobody asked to challenge that position and, whilst we look back on it and say it is in one sense an unrealistic position, that is the position with hindsight.  We do not know, in our submission, what would have happened had the solicitor written and said, we wish to alter that provision.

BELL J:   Is this submission consistent with the judge’s finding at 671, paragraph 93 in relation to the question of negotiations her Honour made the finding:

He didn’t need to open up negotiations.  He didn’t need to consider offering something different –

and so forth.  Now, I am just wondering how to reconcile – you have taken us to particular passages including, very fairly, the passages against you on this topic.  Really are we not dealing with the judge’s findings, critically those that the Chief Justice identified at the very commencement of this appeal, and in the context of those findings, when one goes to the Full Court at paragraph 138, page 712, you get acceptance that the wife is in a position of special disadvantage.

MR LETHBRIDGE:   If your Honour goes, with respect, to 138, what the Full Court found:

There is no doubt that the wife was in a position of disadvantage ‑ ‑ ‑

BELL J:   I am sorry, yes.

MR LETHBRIDGE:   So that the Full Court, in our respectful submission, does not adopt ‑ ‑ ‑

BELL J:   Yes.

MR LETHBRIDGE:   ‑ ‑ ‑ the proposition that she was in a situation of special disadvantage.  She was in a position of disadvantage, yes.  And as they go to say:

but the question is whether the husband took unconscionable advantage ‑ ‑ ‑

BELL J:   Well, now, the Full Court says the evidence does not support that.

MR LETHBRIDGE:   Yes.

BELL J:   But coming back to the findings at 93, I do not know that I am really clear on why the Full Court said the evidence did not support it.  He has inserted the provision which ultimately inured to his benefit in circumstances where it is accepted she is in a position of disadvantage and there was no need for him to open up negotiations or consider offering anything different to her.

MR LETHBRIDGE:   The reason that the Full Court moved away from those findings is of course because the Full Court firstly found that, contrary to the propositions that he knew she would do that, he did not need to open up negotiations, in fact they did negotiate and the point we make – and we can only make it in this fashion – is that where the appellant sought changes with respect to matters which concerned her, there was negotiation and there was agreement.

KIEFEL CJ:   Mr Lethbridge, really one can take this too far, I think.  You have a situation where the appellant’s solicitor is told, there will be no negotiation on this.  The solicitor is terribly concerned about whether the appellant is under pressure – she says that more than one; she has no choice; she is feeling obliged, under pressure of time and impending marriage, to sign the agreement.  In those circumstances, if the solicitor had really thought that negotiations were open as between the parties, are we supposed to infer that she would not have attempted to have improved her client’s position?

MR LETHBRIDGE:   Your Honour is not asked to infer it, with respect.

KIEFEL CJ:   Well, what are we supposed to infer?  Really, we are going over and over this topic as if this is a large matter that the parties were able to negotiate.  We have a solicitor who is concerned about the agreement and its impacts on her client, and you are asking us to assume that the solicitor somewhat, for a reason not obvious on the face of it other than that she thought that there was no negotiation possible, has not sought to better her client’s position.

MR LETHBRIDGE:   The solicitor would not have sought to better her client’s position because, as she said in her evidence, her client was not concerned about those provisions and of course would not have instructed her in respect of any of those provisions.  The client was concerned ‑ ‑ ‑

GORDON J:   Sorry, that cannot fit with the solicitor’s letter at 447, where the solicitor sets out at the end, saying, you are doing entirely away “with your ability to seek . . . Maintenance,” and:

I believe that you are under significant stress in the lead up to your wedding and that you have been put in a position where you must sign this Agreement regardless of its fairness . . . you have told me that you are longing to have a child . . . I urge you to reconsider your position ‑

This is the point the Chief Justice is making to you.  I mean, to sit there and talk about negotiations in circumstances like that is very difficult, is it not?

MR LETHBRIDGE:   It is difficult, your Honour, but it is not a situation where it is closed.  We can only come back to the proposition that we have advanced in our outline, and that is that the issues about which the concern is now raised were not issues about which there would likely have been, on instructions, negotiations.

GORDON J:   But they are raised at 447.  The very issue is raised by the solicitor with her client.

MR LETHBRIDGE:   And the evidence that the solicitor gave was that that was not a matter that concerned the client.

BELL J:   The solicitor went to her senior, did she not, to seek some advice because of the solicitor’s concern about how to handle the circumstances that the client was willing to sign an agreement in circumstances in which the solicitor, speaking perhaps loosely, considered there was duress.

MR LETHBRIDGE:   She did, your Honour.

BELL J:   Yes.

MR LETHBRIDGE:   And the answer that was given to her at that point in time was that it was a matter for the client and she should continue with her interviews with the client and proceed with the agreement subject, ultimately, to the client’s instructions.  These are things that of course, we would contend, relate, as the trial judge found, to the first agreement but then there was a period before the second agreement was signed.

NETTLE J:   Just before we leave the first, the advice of the senior partner for the operative was:

She can sign or not sign.  Toughen up.

MR LETHBRIDGE:   That appears, your Honour, at 312, line 45, yes.

NETTLE J:   It was not that she could negotiate it, it was she can take it or leave it.

MR LETHBRIDGE:   That is correct, your Honour.  That was effectively, that it was a matter for the client, and she could sign it or she could not sign it. 

KIEFEL CJ:   But the point is that the senior partner obviously understood, as the appellant’s solicitor did, that there was going to be no negotiation.

MR LETHBRIDGE:   Without wishing to be too combative, we do point to the fact that the letter that came back ‑ ‑ ‑

KIEFEL CJ:   You pointed us to the evidence.

MR LETHBRIDGE:   ‑ ‑ ‑ and the changes, we can – those things, yes, your Honour.

KEANE J:   Mr Lethbridge, when the appellant said to her husband that the solicitor had said, this is a terrible agreement, the husband’s response was not to say, well, how can I make it better, how can we make it fairer?  His response was to say unpleasant things about the solicitor.

MR LETHBRIDGE:   Yes.

KEANE J:   In those circumstances it really is very difficult to suggest that he was open to negotiation.  He had the opportunity to respond by saying, well, if there are concerns about the fairness of it, let us address it, and he did not. 

MR LETHBRIDGE:   Your Honour is correct, he did not.  I can go no further than I have with respect to taking the Court to those sections of the evidence which indicate that there were changes in the areas that concerned the appellant.  Indeed, those were matters with respect to which we would contend were, in a sense, matters that had been agreed before the relationship commenced, in that they were agreed ‑ ‑ ‑

KIEFEL CJ:   I think you have put that submission.

MR LETHBRIDGE:   ‑ ‑ ‑ but I have put that submission to your Honours already.

KIEFEL CJ:   Perhaps we can go back to the Full Court’s express view that the evidence did not support notions of duress or undue influence and the like.  There is nothing exceedingly unclear about the primary judge’s finding at paragraph 94 that the wife signed the first agreement under duress.  Putting aside the legal terminology, I take it her Honour there means pressure.

MR LETHBRIDGE:   Yes.  I accept that.  I accept the “pressure”.  But if your Honours go to ‑ ‑ ‑

KIEFEL CJ:   Why is there no evidence in paragraph 94 and the evidence preceding it?

MR LETHBRIDGE:   Can I deal with the elements that her Honour refers to, the powerlessness from her lack of financial equality, but if that is a test, in our submission, it cannot be a test ‑ ‑ ‑

KIEFEL CJ:   That is not what is said there.  It is not only from her lack of financial equality.

MR LETHBRIDGE:   No, no, I was going to break it up.  The first element is her lack of financial equality.  In our submission, that was nothing more than a reflection of their particular status at the time, and indeed at the time they met.  If anything, the appellant was in a better financial position at the time the agreement was signed than she was at the time that she met the respondent, because at this stage she had had the benefit of the capital sum and she was in receipt of the monthly stipend.

KIEFEL CJ:   I do not think there would be much disagreement that inequality of financial position per se cannot be a basis for avoiding this agreement.  It is usually inequality of financial position that brings these agreements about.

MR LETHBRIDGE:   That is essentially the position, with respect, that I endeavoured to outline to the Court earlier.

KIEFEL CJ:   But there is much more in the primary judge’s findings then, Mr Lethbridge.

MR LETHBRIDGE:   If your Honour goes to her lack of permanent status in Australia, that was of course correct.  She was here on, the evidence disclosed, a spousal visa but she had status to be elsewhere.  Her reliance upon [Mr K] for all things, in our submission, is simply an emotive phrase but, indeed, not an accurate reflection of the fact.  They were both emotionally connected to the relationship, they were both concerned about the prospect of motherhood at the time.  It is true that the appellant was desirous of having a child but the prospect of motherhood could hardly, in our submission, be a factor going to an element of unconscionability or duress, and the publicness of the upcoming marriage ‑ ‑ ‑

KIEFEL CJ:   What about vulnerability?

MR LETHBRIDGE:   In our submission, no, your Honour, because, as I endeavoured to indicate earlier in these submissions, the appellant had some life experience.  She had been a party to one failed marriage, she had been a party to a de facto relationship which lasted some years, so the prospect of a potential relationship breakdown was one which was something that realistically she should have been and must have been in a position to contemplate.

KIEFEL CJ:   She is not on trial for negligence, I do not think. 

MR LETHBRIDGE:    I am sorry?

KIEFEL CJ:   Do not worry. 

MR LETHBRIDGE:   If a term of determination going to whether or not an act or a particular event is unconscionable is the emotional connectedness, there was, in our submission, no sufficient emotional connectedness here to separate this from any circumstance where any two parties are contemplating marriage.  But this was a marriage contemplated within the context of the requirement that was always part of the marital arrangement that there be an agreement.

EDELMAN J:   You may indeed be right that every single one of these factors by itself is not sufficient to establish a special disadvantage or a vulnerability or pressure, but what the primary judge is saying is one looks at all of these factors as a whole.

MR LETHBRIDGE:   Yes, and in our submission we necessarily maintain that if one looks at them to ascertain their significance within the context of an overall finding, there are a number of them which simply cannot, we submit, be particular propositions that have any significant weight.  But by way of ‑ ‑ ‑

KIEFEL CJ:   May I interrupt you, Mr Lethbridge, just on that point?  The primary judge sums it up, apart from the finding about duress or pressure, at paragraph 94 by saying:

there was no outcome available to her that was fair or reasonable.

MR LETHBRIDGE:   In our submission, that is ‑ ‑ ‑

KIEFEL CJ:   Is that not available from the foregoing findings?

MR LETHBRIDGE:   In my submission, no, your Honour, because the agreement was, in our submission, in the context in which the parties determined that they would negotiate it from the beginning of their relationship, fair and reasonable.  It provided exactly what it was that the appellant wanted.  If your Honour goes to her concerns, she was concerned about the fact that she, if she came to Australia, would have nowhere to live, she would have no income to live upon. 

The agreement, unlike many agreements, made a specific provision which set the limits of those provisions.  As we have said in our oral argument, in reference to our submissions, they were that he would pay the outgoings.  Your Honours will find those in paragraph 30(i) of the primary submissions, that during the marriage the husband would pay all the outgoings on their matrimonial home, he would pay the appellant maintenance of the greater of $4,000 per month or 25 per cent of the income of his development, permit the applicant’s family to ‑ ‑ ‑

KIEFEL CJ:   I think we are familiar with the terms of the agreement, but these were not matters gone into in detail before the appellant came to Australia, were they?  They were discussed in broad brush.

MR LETHBRIDGE:   They were certainly discussed in broad, but when your Honour goes to the agreement, we would contend, that forms the basis of the relationship, these are provisions which certainly satisfy those requirements, so that when the agreement was presented in areas which were areas of concern the provisions were, firstly, consistent with the circumstances which formed the basis of the parties’ agreement, in that they provided generously, perhaps, for the appellant during the marriage and they provided significantly for her in the event that the respondent predeceased her.

True, it is, that in the event that the marriage broke down, saving except where there were children, because of course there were different provisions on breakdown if there was a child or children – they were provisions which, unless the marriage were to end very, very shortly after its commencement, were unlikely to be reflective of the court’s determination having regard to the respondent’s asset position.

But if I could, perhaps, address at that point, a matter that my learned friend has made a number of submissions about, and that is that there is no obligation for maintenance support post‑separation.  The provision of the Family Law Act is that each party is responsible for their own maintenance and it is only if, and only if they are unable to support themselves that the issue of maintenance arises.  So that whilst it may be the case that there is a moral obligation – and I would concede there probably is a moral obligation within a marriage for maintenance and support – it is an obligation that can only at its highest be a moral obligation because there is no capacity to enforce it.

KIEFEL CJ:   Have you moved to paragraph 2 of your outline of argument?

MR LETHBRIDGE:   Yes, your Honours.  The agreement, as we say – and we refer to the provisions of section 95 – are intended – or the agreements are intended to achieve the very object that this agreement achieved and that is to enable the parties, subject to the application of the general law with respect to undue influence, duress and unconscionability, to enter into agreements that oust the jurisdiction of the court.

The only gloss upon that ouster of jurisdiction arises with section 90F which provides a capacity to set aside an agreement in the event that the agreement is one where the party seeking to set it aside is unable to support themselves without a government means‑tested benefit.  That was not a matter agitated at trial.  Indeed, we can understand why.

In any event, our position is that these agreements inherently will, when they fall for consideration, give rise to a situation where the outcome is almost certainly not going to be the outcome that would occur if the matter were litigated in the Family Court and the provisions of sections 79, 72 and 74 apply. 

They serve, in our submission, a very relevant and important provision adding to the law in this country.  As we said in our primary submissions, they are designed to take account of the very facts that arose in this case, and arise in many cases, where there are marriages entered into which are second marriages, where there are family businesses involved, where they are country properties, for example, involved and there is a desire in the parties to isolate those assets from the potential application of the Family Law Act and that is only a sensible circumstance given the modern situation in which society finds itself. 

So that turning to – and as, of course, to perhaps address my learned friend’s reference to section 43 of the Act, in our contention, as much as these agreements may be said to be agreements which might inhibit a marriage they are agreements which encourage a marriage because they enable people who may be widowed, people who have been divorced, to enter into separate second marriages where the provisions for children of their first relationship, assets built up over time without assistance from their proposed new partner can be divided and separately isolated from application.

So, as much as it might be said that these agreements pursuant to Part VIIIA may be inhibiting, we would contend that they facilitate marriage because they facilitate circumstances in which parties are able to isolate for the benefit of their children or, as I say, for the benefit of future generation’s particular assets.  That was the position in which the respondent arranged and conducted the commencement of his relationship with the appellant to her knowledge.

So that in terms of duress and the relevant tests it is our contention that they are, in essence, as the law has developed over time and that nothing within section 90K(1)(b) or (1)(e) is a licence to expand the generally accepted legal tests by reason of the fact that the test is being applied or considered in relation to the breakdown of a relationship. 

The fact that there is a relationship and the circumstances in which the relationship is entered into plainly are relevant facts going to the circumstances in which the agreement is reached.  But they are not of themselves a factor that gives rise to any prima facie circumstance of disability or special need, if I can use that term.  So as we said, the relevant test for duress, we would contend, is the test applied in the Full Court and that is the test from ANZ v Karam. 

In the event that my learned friends as they do continue to contend that there is no reasonable alternative test we have dealt with that because, in our submission, such a proposition is unsustainable.  Indeed while in this particular case the alternative may have been unpleasant, that is that it would have led to some embarrassment, it would have led to the appellant not being permitted to reside within Australia and to continue to reside here, that in itself, in our submission, was not something that could possibly be said to be akin to no reasonable alternative.  She had an alternative, in our submission.  It may have been unpleasant but it was always an alternative.

Perhaps I should take your Honours to – in relation to the second agreement, I have just been reminded that there is some evidence of Ms Harrison which picks up one of the propositions that your Honours have put to me that Ms Harrison was concerned about the pressure in relation to the first agreement and that is evidence from the appellant at page 434, commencing under the heading “The second Agreement” - paragraph 74:

“Go and sign one more time so it doesn’t look like I was forcing you to sign the first time.  Because of the pressure of the wedding you must sign again.”

The appellant attends Ms Harrison’s office.  Ms Harrison says to her:

“You have to sign again because they think you were pressured to sign the first agreement.  You must sign twice or it is not binding.”

I said:  “What was binding?”

She said: 

“To be sure you get what you are entitled.”

Then she goes on to say:

“[P] kept telling me over and over that I must sign twice.”

The opportunity to, in our submission, negotiate arose at that point.  But, as we said in our submission with respect to the second agreement, a number of the concerns and findings of the trial judge with respect to the first agreement, in fact, must fall away.

GORDON J:   Is the second agreement where he rings from the car and says hurry up or something – the findings made by the trial judge?

MR LETHBRIDGE:   There is no doubt, your Honour, that the respondent was anxious to have this resolved.  But having said that, however forcefully he put the proposition there was an opportunity to not sign.  It was not a situation as compared to the trial judge’s finding with respect to the first agreement where the respondent is found to have said if you do not sign the second agreement you will be out on the street.  There is no suggestion in the evidence that apart from saying you must sign it that he proposed that if she did not sign it the marriage would be at an end.  That was not something that arose from the evidence.

By that stage of course [Ms T] was in receipt of the benefits that had been conferred by the first agreement and true it is that Mr – pardon me, I have referred constantly to the parties, I should not.  True it is that the respondent wanted the second agreement signed.  It was not a situation where, apart from saying, as your Honour has said, you must sign it, he threatened any consequence if she did not sign it.  There is no suggestion that at that point the marriage would be at an end.

GORDON J:   The finding I think at 663 at paragraph 57 is that not only is there a phone call but:

Ms Harrison gained the distinct impression that the wife was being pressed to not spend too long on this issue but to get the document signed.

MR LETHBRIDGE:   That was certainly – and that would be consistent with the desire of the respondent who was anxious to have it signed.  But, nevertheless, the agreement was again not in the same detail something that was explained to the appellant and again, she was advised not to sign it.

GORDON J:   This comes back, I think, to something the Chief Justice asked you and that is that the point made then at 89 by the primary judge was there was just no creation of any opportunities to negotiate.  There was a creation of circumstances, both in terms of timing and otherwise, different circumstances possibly applicable between the first and second that created no opportunity to negotiate. 

MR LETHBRIDGE:   The second agreement does not have the same urgency in terms of the marriage.  Nor does it suffer from the same finding that the trial judge made with respect to the first agreement, namely, that if it was not signed the appellant’s evidence “You’ll be out on the street” is accepted.  So, in relation to the second agreement, we have the marriage, we have the implementation of the terms consistent with the agreement and we have certainly the taking of the appellant to the solicitor’s office and, as your Honour correctly says, we do have telephone call – “Don’t take too long or how long are you going to be?”  But that is really nothing, in my submission, more than the gentleman who believed that he had the original agreement ringing to see how things are going.

EDELMAN J:   Well, there is no finding either way, is there, as to what she understood the consequences would be if the appellant did not sign the second agreement?

GORDON J:   Well, 96 goes quite close – page 671.  It says:

In all respects the second agreement was simply a continuation of the first – the marriage would be at an end before it was begun if it wasn’t signed.

EDELMAN J:   When that conclusion is read in light of her evidence that she had only ever been referred after marriage to being a wife with a contract and that it was not her house or her car or her boat, all she had was a contract and no more, there might be seen in that finding almost an implicit suggestion that the marriage would be at an end if the contract was not signed.

MR LETHBRIDGE:   In our submission, the evidence cannot go that far because there was no direct evidence as to that matter.  Certainly, there was no evidence from [Mr K] apart from the fact, as has been said, he was anxious to have it done.  There is nothing to suggest in the evidence that had he not – had she not signed it that the marriage would have been at an end. 

The marriage had taken place.  The respondent had been consistent from the very earliest time he had met the appellant in making the payments that he had agreed to pay so that she had the community of the relationship, she had the marriage, she had the benefits of the agreement itself that pertained to her monthly payments, the provision of the motor vehicle and such whilst she was within the agreement – whilst she was within the marriage, so that, as we would contend, it is simply not open to say that in all agreement – in all respects the second agreement was simply a continuation of the first. 

Yes, that is true as to its terms, in essence, but that the marriage would be at an end before it begun if it was not signed is simply not open, in our submission, because that was not a conclusion based on any of the evidence.

EDELMAN J:   It is not quite the question, though.  The question is whether she could have perceived that to be a consequence.

MR LETHBRIDGE:   No, she could not have had that perception for these reasons, your Honour:  firstly, because it would be unlikely to be a perception in circumstances where she was unconcerned about the marriage ending and certainly there was no direct evidence given that it was ever, to use a term, “a threat”.  If your Honours go to the totality of the evidence that I took the Court to with respect to the affidavit evidence of the appellant with respect to the second agreement, there is no suggestion of any threat. 

There is an explanation, certainly, as to why it was that the respondent was wishing to have the second agreement re‑signed but as the witness said with respect to the signing - the appellant, “I believed that as long as I stayed with [P] and cared for him we would live happily together.  I decided that I would never leave [P] so the agreements did not matter.” 

What the respondent had said with respect to the agreement and one would expect if there were a threat it would be within this evidence, “Go and sign one more time so it does not look like I was forcing you to sign the first time. Because of the pressure of the wedding you must sign”.  That, in our submission, is nothing more than a statement of the respondent’s concern. 

He does not say as had been said and accepted in relation to the first agreement, “If you do not sign the marriage is at an end”.  Of course, if the marriage was not at an end then the appellant continued to have the benefit of those particular clauses in the agreement.

GAGELER J:   The second agreement, I think, was entered into in pursuance of a provision of the first agreement, was it not?

MR LETHBRIDGE:   That there would be a similar agreement entered into within a reasonable time thereafter, yes, your Honour.

GAGELER J:   Well, more specifically, that within 30 days there would be a further agreement and it would be in terms similar to the terms provided.

MR LETHBRIDGE:   Yes.

GAGELER J:   So, within the first agreement you have the timeframe for the second agreement and, indeed, the scope of the second agreement already limited.

MR LETHBRIDGE:   We do and in I suppose defence of the respondent, the second agreement was signed on 27 November so that time – so that it was not in the 30 days and as the appellant says after several months had passed – I think it is two months effectively - your Honour finds that at 434 paragraph 74, line 20.

GAGELER J:   Now, there were handwritten amendments to each of the agreements.  Were the handwritten amendments to the second agreement different in substance from the handwritten amendments to the first agreement?

MR LETHBRIDGE:   No, and they were the handwritten amendments which tightened up the succession provisions requiring if necessary a testamentary trust and restraining the respondent from executing any testamentary disposition that did not include the terms that had been agreed being the unit to the value of $1.5 million and so on.  So as I am reminded, the handwritten amendments are the same.  There are no other textual changes, your Honour.

GAGELER J:   Thank you.

MR LETHBRIDGE:   It is the same document with the same amendments.

KIEFEL CJ:   Have you finished with the ground of duress then?

MR LETHERBRIDGE:   Yes.  We would contend with respect to undue influence and as we submit in the written outline and in the short speaking notes that there is or should be in this country at least in 2007 no presumption of undue influence between either of the parties particularly the female party to a prospective marriage. 

If one goes to the consideration of the authority to which my learned friend refers is the basis of that proposition and its consideration, Hyman v Hyman, that of course was a case decided in 1929 and it was only a year after universal suffrage had been granted to women generally and only 10 years after women over the age of 30 and subject to certain property entitlements were able to vote. 

There is no proposition and, indeed, the context of Part VIIIA and, indeed, the introduction of Part VIIIAB makes plain that it is not intended that an agreement entered into prior to marriage be contextually any different from an agreement entered into during marriage or following marriage with respect to the arrangements on separation.

We have contended and we take your Honours to our submissions paragraphs 62 and 63 of the primary submissions to support the proposition that there was no actual undue influence that was exerted in these proceedings.  Rather than repeat what I have said to your Honour because the basis upon which we make these assertions is set out in the facts which we have asked your Honours to have regard to and they themselves are in the submission but they have their fundamental beginning in the arrangement that the parties struck before they commenced their relationship at all and the condition upon which they commenced their relationship, namely that there would be no marriage unless there was an agreement and the terms of that were known to both of them insofar as they were of interest to each of them in terms before they met.

My learned friend’s reference to Louth v Diprose, those were circumstances, of course, which were extreme in the sense, as your Honours will know, there was a threaten to suicide in that particular case and there is, in this particular case, in terms of the emotional connection between the parties, while there has been an emphasis placed on the appellant’s emotional connection there is no suggestion that the respondent was not in terms of the marriage the acquiescence to having children any less emotionally connected.  It was an emotional connection overlaying a requirement properly provided for in the Family Law Act, namely that there be an agreement and it have certain provisions.

We have then, your Honours, turning if we can to unconscionability, we have in our primary submission made reference to the second reading speech which was the speech which dealt with the amendment to the Act which was sought by the Democrats in the Senate and which gave rise to the inclusion within the Act of section 90K(1)(e) and if I can take your Honours to that part of the – and that appears, your Honours, commencing at page 349 and it is extrapolated out in paragraphs 15 and 16 of our primary submissions but as the then Attorney said:

Binding financial agreements will be of particular benefit to people who are entering subsequent marriages as well as to people on the land and those who own family businesses.

The aim of introducing binding financial arrangements is to encourage people to agree about how their matrimonial property should be distributed in the event of, or following, separation.

The explanatory memorandum refers again to the differing social mores at the time of the introduction of the Bill:

the increased workforce participation by women before and during marriage has meant that marriage is becoming increasingly recognised as an economic partnership as well as a social relationship.

KIEFEL CJ:   That might be a convenient time, Mr Lethbridge.  The Court will adjourn until 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

KIEFEL CJ:   Yes, Mr Lethbridge.

MR LETHBRIDGE:   Your Honours, immediately prior to the adjournment I was taking your Honours to the position adopted in the second reading speech with respect to the addition of section 90K(1)(e) to the Act.  That of course, as your Honours will know, is the section which refers specifically to unconscionable behaviour.

In paragraph 90 of our primary submissions, we have quoted the relevant part from the second reading speech.  In that quote the then Attorney‑General said this in respect of the amendment that had been proposed in the Senate by the Democrats:

Although the government did not oppose this amendment, it was in our view not necessary.  The bill as it stood included grounds for setting aside where the agreement is void or voidable.  These grounds incorporate both common law and equitable grounds and, in the view of the government, included the position where an agreement would have failed because of unconscionable conduct . . . It is not the intention that that ground now be taken to have greater importance than other equitable or common law grounds, nor that it have a different meaning than it would have at common law or in equity.

In turning then to deal generally with the issue of unconscionability could I firstly take your Honours back to the evidence of the appellant with respect to the signing of the second agreement.  It was common between the solicitors and the parties that the signing of the first agreement and the circumstances in which it was might have led to some issue of duress.  Indeed, as the solicitor for the appellant pointed out in her letter, “In fact, I believe she had.”  In paragraph 74 of the affidavit, page 434 of the appeal book, the appellant says:

After several months had passed, I was told by [P] I had to go back to Ms Harrison to sign another agreement. 

…..

My sister accompanied me . . . Ms Harrison said words to the following effect:
“You have to sign again because they think you were pressured to sign the first agreement.  You must sign –

the agreement:

or it is not binding.”

So at that point it was brought, in our submission, to the appellant’s attention that that first agreement might not be binding and she says:

I said:  “What was binding?”

She said:
           “To be sure to get what you are entitled.”

In other words, the solicitor is saying, we contend, to the client, you need to sign this because the first one may not be binding and you will not get what you are entitled.  Now, to put that into context, could I take your Honours ‑ ‑ ‑

GAGELER J:   Sorry, you prefaced that submission by saying you contend.  Is there a finding as to how those words are to be interpreted?

MR LETHBRIDGE:   No, there was not, your Honour, but might I take your Honour to the evidence of the attorney herself.  That appears at page 334 of the appeal book.  There is, firstly, at the top of the page, some discussion about the monthly provision.  But at point 30, line 20:

Now, your second point was the note, “Wills.”  The discussion you had with [Ms T] was in relation to wills; what the provision would be in the event of [Mr K]’s death?

KIEFEL CJ:   You are still referring to the parties’ names.

MR LETHBRIDGE:   I apologise, your Honour – the respondent’s death.  She goes on to say:

And that was something that you were satisfied she had an understanding of insofar as it was included in the agreement?—That the agreement included a provision about what should happen in the event of ---

Yes?---Yes, yes.  She understood that.

And that was something that she engaged you in, was it not?---The – it was something that she engaged me in to the extent that it was very important to her, and she made this clear to me on that occasion, that in the event of [the respondent’s] death, that there was provision made for her and, in fact, that was the most important thing in the agreement to her which was something that caused me concern at the time.

Right.  Does that – does it follow then that while she, so far as you could determine from discussion with her, was fully aware of provisions that would apply in the event of a separation---?---Yes.

--- that was not something that was at the forefront of her mind?---No.  It was the testamentary provisions that were at the forefront of her mind.

But she was aware, so far as you could determine in that conference, of the provisions that would otherwise apply in the event of a separation?---She was.

Next question:

Yes.  And you made it clear to her, did you not, that, as far as you were concerned, these provisions were wholly inadequate?---In relation to everything, yes.

Yes?---Yes.

And do you recall what her reaction was to that?---She was – in relation to the property settlement, she was almost dismissive of it ---

On the ?--- ---being inadequate on the basis that she said that she didn’t intend to leave [the respondent] at any time and didn’t – when I raised with her the prospect that [the respondent] might find her surplus –

presumably to:

requirements, that didn’t seem to have – I mean, [the respondent] might cause a separation himself – that didn’t seem to have any impact at all.  She was most interested in getting married, because she could have a child and what might happen in the event of [the respondent’s] death.

So that overlaying the proposition with respect to the second agreement, which is the agreement that is the binding agreement at present, those are the circumstances in which the appellant approached its signature.  With respect to the advice that she might have been given, her own evidence, which appears at 141 of the book, is speaking of the second agreement, commencing at about point 20 on the page, line 15:

When you went to see Ms Harrison on the second occasion, did she still tell you that she was worried that the death provisions wouldn’t work?

THE WITNESS:  All I remember is that Mrs Harrison said, “If you are not in his will, this agreement is not valid.”

Question:

And I want to suggest to you that Ms Harrison made that matter quite clear to you, didn’t she?

THE WITNESS:  Yes.

And she also made clear to you again that in her opinion, the agreement was not one that you should sign, didn’t she?

THE WITNESS:  Yes.  She mentioned it to me but what else could I have done.  I didn’t have other options.

You did talk to Ms Harrison about why the agreement needed to be signed . . . 

THE WITNESS:  So that the contract – so the agreement be valid.

Did you speak to Ms Harrison about why it was that the agreement needed to be made valid?

THE WITNESS:  So that I can get what I am entitled to.

GORDON J:   Mr Lethbridge, I find this difficult without a finding because – and I make my criticism of you – at appeal book 138 you ask [Ms T] a question about whether or not she was concerned about being handed the second agreement, and she said:

I was worried – yes, I was concerned because I was frightened that [P] will get upset with me and my parents were still here.

How are we to seek to, without the findings of the primary judge – are we to trawl through all this transcript and try and get an impression ourselves about whether or not she was concerned, not concerned, she was worried about bits or not worried about bits?

MR LETHBRIDGE:   No, your Honour.  The way in which the matter, in our submission, needs to be approached is within the context – can only be approached as your Honour says, within the context of the findings made by the trial judge, as accepted later by the Full Court.  But when one goes to her Honour’s finding at trial that the same situation applied with respect to the second agreement, as did with the first agreement, that was something the Full Court held was incorrect and that is what we contend is, in fact, plainly incorrect.

KIEFEL CJ:   But the primary judge also made findings of fact, at appeal book 671, 97:

The wife plainly had no choice that she could reasonably see, but to sign the agreement.  In those circumstances the second agreement was plainly signed by the wife under duress.

Put aside the legal conclusion, the finding of fact is quite plain.

MR LETHBRIDGE:   And, indeed, your Honours, we contend that the Full Court rejected that finding.

KIEFEL CJ:   Where?  Take us to the passage where the Full Court did that.

GORDON J:   Just while you find that, Mr Lethbridge, the Chief Justice asked that question – I ask you also to take into account that at page 693 to 694 of the Full Court reasons they set out verbatim, without clarification, those very paragraphs the Chief Justice has taken you to.

MR LETHBRIDGE:   They do, your Honour.

KIEFEL CJ:   I think they might have dealt with it at page 701, at the top of the page.

MR LETHBRIDGE:   Paragraphs 77, 78 and 79.

KIEFEL CJ:   Their Honours do not seem to realise that that is a finding of fact.  They seem to think it falls with an incorrect assessment of what amounts to duress.

MR LETHBRIDGE:   That is the section  to which I was referring, your Honours – and I can only refer.  But there are a number of differences.  Indeed, the circumstances between signature of the first agreement and the second, in our respectful submission, give rise to a number of quite plain differences.  Firstly, there was no impending marriage.  Secondly, to the extent that the first agreement included a provision that the second agreement would be in similar terms, that of course was entirely unenforceable because the first agreement would only become effective upon the signing of a separation declaration so that it was, in effect, a statement of intent rather than something that indeed either party could enforce. 

By the time we reach the second agreement, some couple of months after the marriage, the circumstances are, firstly, a concern about whether the validity of the first agreement is tight or not.  In other words, there is concern that it may be invalid.  If it is invalid then of course the appellant has the benefit of the provisions of the Family Law Act with respect to her position in any event so that whereas there was a greater, we would contend, imbalance of power there the balance there is that in the case of the respondent there must be concern that the agreement as he wanted it is in fact binding.  So that there is a change in the factors that exercised the minds of, indeed, both parties but principally the appellant.

While she went ahead and signed, we would say she did so in the face of legal advice that she should not, in circumstances where she understood that the first agreement might not be binding and where indeed a reading of her reasoning was that she wished the agreement, so far as it provided for the testamentary provisions, to be binding.  We make no criticism of that because it is unsurprising that in the appellant’s mind the fact that her husband might predecease her was a very real consideration and of course had been the subject of her initial concerns.

Turning to whether or not in the circumstances of this case there can be a situation of duress notwithstanding legal advice, we deal with this in paragraph 76 of our primary submission where we say that in this case the appellant received independent legal advice before the first and second agreements, understood that advice but chose not to follow it, the legal advice was not merely an explanation of the terms and effect of the transaction but importantly also advice on the advantages and disadvantages in entering into the transaction.

As your Honours know, the letter of advice made it perfectly plain that there were disadvantages but absolutely no advantages and that is a letter of advice that Ms Harrison gave evidence she took the appellant through paragraph by paragraph and that was on the second of the two conferences that she held with the appellant at the time the first agreement was signed and again she went through, she says, but not in the same degree of, forceful but not in the same degree of detail when the second agreement was signed.

We have referred your Honour to the authorities which we contend ought be the authorities that your Honours have regard to, which indicate where it can be shown that the plaintiff received adequate independent legal advice and understood that advice.  It is not necessary in order to rebut presumption to show that the advice was followed.  And we quote from Lord Nicholls in Royal Bank of Scotland v Etridge:

If the solicitor considers the transaction is not in the wife’s best interests –

and this was a case, as your Honours will know, involving the signature to guarantees:

he will give reasoned advice to the wife to that effect.  But at the end of the day the decision on whether to proceed is the decision of the client, not the solicitor.  A wife is not to be precluded from entering into a financially unwise transaction if, for her own reasons, she wishes to do so.

So while we keep, I suppose, in essence coming back to the proposition that viewed from the context of a family lawyer’s perspective, and her solicitor was an accredited family law specialist, this is an agreement which provided inadequately for a circumstance where a marriage might break down and where the solicitor worked in an area which of course frequently saw this occurring, but that does not detract from the proposition that understanding that advice it was open to the appellant to say, I am not concerned about that but I am concerned about two other elements, and those are the elements which, in our submission, were dealt with and dealt with generously within the agreement itself.

We received, your Honours, a request that we deal specifically with section 90F of the Act and, your Honours, we have provided a short written outline of our contentions with respect to the section.  Section 90F is, at the end of the day, a safety net provision which needs to be looked at in the context of the law with respect to maintenance following the breakdown of a marriage and that law is embodied in section 72 of the Act, which provides that a party to a marriage has an obligation to support the other party only if that other party cannot adequately support themselves.

The circumstances in which that inadequate support can be established include illness, the care of young children, there is a catch‑all provision “any other adequate reason”, but the extent of the support then is a further limited circumstance where that support can only be to the extent that the other party is reasonably able to support the party seeking maintenance.

So that in our submission it is difficult to see how section 90F could be other than framed in the way it is because of course the circumstances in which these agreements will become effective are so many and varied that to try to legislate a proposition which would leave some part of the Act available would be tantamount to, in our submission, doing away with a number of the benefits which Part A is intended to confer.

So Parliament has determined that in the case of a maintenance situation it is only if the party, when the agreement becomes effective, is unable to support themselves without a government benefit that the issue arises and of course if the issue arises the agreement falls.  That was not a point of course that was taken in these proceedings and we would have contended, had it been, that it was not a point available to [Ms T].  That arises essentially because at the trial she had formed a second relationship or a further relationship and the provisions, we would contend, of sections 72, 74 and 75 would not have applied.  Your Honours, those are our submissions with respect to that particular section.

My learned friend referred to ‑ and his submissions and his reply refers to a supposed non‑concession given by counsel appearing for the appellant’s before the Full Court.  That is not something that we concede but we did not address it on the basis that we did not see its relevance to the matters before your Honours, but the fact is that we would contend that your Honours were quite correct in determining that the concession had been given for what it is worth.

Those are our submissions, your Honours.

KIEFEL CJ:   Anything in reply, Mr Foley?

MR FOLEY:   Yes, your Honour.  In view of the last point, I do seek leave to read the transcript attached to the affidavit of my learned instructing solicitor as the matter has not been conceded.  In fact, it has been urged on the Court that the ‑ ‑ ‑

KIEFEL CJ:   So the purpose of doing this is to show that the Full Court misunderstood the argument being put to it.

MR FOLEY:   Yes, your Honour.

KIEFEL CJ:   And that its reasoning in part hinges upon this concession.

MR FOLEY:   Yes, your Honour.

KIEFEL CJ:   Does it really?  Does the Full Court’s decision really use what they understood to be a concession?  What is the paragraph again, Mr Foley?  At paragraph 68, so the complaint to which the Full Court accedes is that the primary judge applied a wrong legal test and they go on to say that was effectively conceded.

MR FOLEY:   Yes.

KIEFEL CJ:   But it is not the concession upon which they are operating.  They determine that for themselves, do they not, and the Full Court is either right in that or the Full Court is not and that is what we determine.  A concession by counsel in these circumstances is not going to operate.

MR FOLEY:   Very well.  I will leave that ‑ ‑ ‑

KIEFEL CJ:   We do not need the transcript, Mr Foley.

MR FOLEY:   Thank you.  I make two points in reply.  In response to the question posed by his Honour Justice Gageler as to the finding of fact on the second agreement, we repeat and rely upon the findings of fact of the trial judge at paragraphs 95, 96 and 97 which appear in the appeal book at 671.  As to the weight to be given to the approach of an appellate court to trial judge, we point to the traditional proposition about the great advantage enjoyed by the primary judge and point in that respect to the passage in Louth v Diprose where Chief Justice Mason, at page 626, says:

In this respect I agree with all that Deane J. has written with reference to the great advantage enjoyed by the primary judge ‑

My final point on the question of law is simply to deal with section 90K(1)(e), which is the statutory unconscionable provision.  My learned friend dealt with it.  Our submission is yes it does mean something other than what the law of equity means but this appeal does not turn on that point and in particular I point to the passage in Garcia v National Australia Bank to make the point ‑ this is through Justices Gaudron, McHugh, Gummow and Hayne at page 408 ‑ in dealing with the equitable doctrine of unconscionable conduct in Amadio, at about line 29, their Honours said this:

Secondly, far from anything said in Amadio suggesting that it was intended to mark out the boundaries of the whole field of unconscionable conduct, as Mason J said:

“It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct.”

That is to say, Amadio itself is sufficiently elastic to accommodate the concerns of this case. It may be in due course that the doctrine of statutory unconscionability develops a life of its own in the manner that it has in Australian consumer law but in our respectful submission either or both of the equitable doctrine or the statutory provision are sufficient to deal with the facts of this case. That is all the matters I have in reply, your Honour.

KIEFEL CJ:   Thank you, Mr Foley.  The Court reserves its decision in this matter and adjourns until 9.45 am tomorrow for pronouncement of orders.

AT 2.45 PM THE MATTER WAS ADJOURNED