Vance and Vance
[2012] FMCAfam 599
•22 June 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VANCE & VANCE | [2012] FMCAfam 599 |
| FAMILY LAW – Property – Wife’s application to set aside binding financial agreement – declaration made pursuant to s.90B of the Family Law Act 1975 – application dismissed – costs submissions to be filed. |
| Family Law Act 1975, ss.90B, 90G, 90K, 90KA |
| Hoult& Hoult (2011) FamCA 1023 Senior & Anderson (2011) FLC 93-470 |
| Applicant: | MS VANCE |
| Respondent: | MR VANCE |
| File Number: | BRC 568 of 2011 |
| Judgment of: | Baumann FM |
| Hearing date: | 31 August 2011 |
| Date of Last Submission: | 12 October 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 22 June 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Curran |
| Solicitors for the Applicant: | Macdonald Law |
| Counsel for the Respondent: | Mr Fleetwood |
| Solicitors for the Respondent: | Anthony Black Family Law |
ORDERS
The Court declares that the Financial Agreement made on 27 March 2006 pursuant to s.90B of the Family Law Act 1975 is a binding financial agreement within the meaning of s.90G of the Act.
Pursuant to s.90G of the Family Law Act 1975, the Wife’s application filed 28 January 2011 to set aside the Financial Agreement dated 27 March 2006 be dismissed.
All other applications be dismissed.
Any application for costs by the Husband shall be filed and supported by written submissions within twenty-one (21) days.
The Wife shall file and serve any submissions in response to the Husband’s application for costs within forty-two (42) days.
Unless otherwise ordered, the issue of costs shall be determined in chambers.
IT IS NOTED that publication of this judgment under the pseudonym Vance & Vance is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 568 of 2011
| MS VANCE |
Applicant
And
| MR VANCE |
Respondent
REASONS FOR JUDGMENT
Introduction
On 27 March 2006 the Applicant Wife Ms Vance and the Respondent Husband Mr Vance, some six days prior to their marriage and cohabitation, signed an agreement (“the agreement”).
The agreement contained a Certificate under s.90(1)(6) of the Family Law Act 1975, in identical terms namely:-
“1.…certify that before this agreement between MR VANCE and MS VANCE was signed by … I provided … with independent legal advice as to the following maters:-
1.The effect of the Agreement on the rights of …
2.THE advantages ad disadvantages for … in making the Agreement.
DATED: 27.3.06
SIGNED:…………”
The certificate for the Husband was signed by Ms B. The certificate for the Wife was signed by Mr King.
On 5 February 2010, the parties finally separated and on 28 January 2011, the Wife commenced proceedings in this Court seeking orders for settlement of property and spousal maintenance. The Initiating Application and the Wife’s affidavit in support made no mention of the agreement. However, the Husband’s responding affidavit filed 10 March 2011 did refer to the existence of the said Agreement and as a result, sought that the Wife’s application be dismissed.
As the reasons below set out, the Wife was given leave to amend her Initiating Application to “plead” the relief she sought in respect of the agreement – namely:-
a)A declaration that the agreement is not binding as the procedural requirements of s.90G of the Family Law Act 1975 have not been complied with; and/or
b)The agreement be set aside pursuant to s.90K of the Act.
The reasons which follow deal with these issues.
Applicable law
Part VIII of the Act does not apply to financial matters (which includes property settlement and spouse maintenance) “to which a financial agreement that is binding on the parties to the agreement applies” (s.71A(1)(a)).
Section 90G of the Act determines whether a financial agreement “is binding on the parties to the agreement”. Section 90G provides:-
“When financial agreements are binding
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a)the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a court.
Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995 .
(1A)A financial agreement is binding on the parties to the agreement if:
(a)the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court.
(1B)For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application ) by a spouse party seeking to enforce the agreement.
(1C)To avoid doubt, section 90KA applies in relation to the enforcement application.
(2)A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.”
In Senior & Anderson(2011) FLC 93-470 (which I note was delivered prior to the hearing of this matter), although separate judgments were delivered by the Full Court members (May, Strickland and Murphy JJ, there did seem to be agreement that the helpful manner in which Counsel for the Appellant had “consolidated” s.90G to take account of amendments insofar as they applied to the agreement in that case (being an agreement made after 14 January 2004 and before 4 January 2010 – as is relevant to the agreement in this case (dated 27 March 2006).
In those circumstances, as Murphy J did at [189], I also adopt the following relevant “consolidation” as accurate, namely:-
“90G When financial agreements are binding
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement;
OR
before signing the agreement, the spouse party was provided with independent legal advice from a legal practitioner about:
i.the effect of the agreement on the rights of that party; and
ii.whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
iii.whether or not, at that time, it was prudent for that party to make the agreement; and
iv.whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in the italicised text or, in the alternative, stating that the advice referred to in the text in paragraph (b) above, was provided to that party (whether or not the statement is annexed to the agreement); and … (footnotes omitted)”
Although the Wife, in her amended application sought an order that “the Financial Agreement be set aside pursuant to s.90K of the Family Law Act 1975”, in final written submissions Counsel for the Wife made no submission in respect of s.90K relief. For the reasons which follow (and for completeness) in case I am wrong to have inferred that the Wife had abandoned that relief, I include in these reasons s.90K and s.90KA as follows:-
“90KCircumstances in which court may set aside a financial agreement or termination agreement
(1)A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(a)the agreement was obtained by fraud (including non-disclosure of a material matter); or
(aa) a party to the agreement entered into the agreement:
(i)for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; or
(ii)with reckless disregard of the interests of a creditor or creditors of the party; or
(ab) a party (the agreement party ) to the agreement entered into the agreement:
(i)for the purpose, or for purposes that included the purpose, of defrauding another person who is a party to a de facto relationship with a spouse party; or
(ii)for the purpose, or for purposes that included the purpose, of defeating the interests of that other person in relation to any possible or pending application for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship; or
(iii)with reckless disregard of those interests of that other person; or
(b)the agreement is void, voidable or unenforceable; or
(c)in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or
(d)since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or
(e)in respect of the making of a financial agreement--a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; …”
90KA Validity, enforceability and effect of financial agreements and termination agreements
90KA The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.”
The onus of establishing there is a financial agreement which is binding rests upon the Husband who assets that to be the case. The Wife, who asserts there are factors which make the agreement either not binding (under s.90G) and that it should be set aside (under s.90K) rests with the Wife.
Evidence and findings on the evidence
The Wife relied upon her evidence in the affidavits set out in her case outline filed 5 August 2011. The Wife sought to rely upon evidence by a solicitor Jason Greig which was opposed by the Husband. For reasons given orally at the time, I agreed that the evidence was not able to assist the Court or was irrelevant, and would not allow the Wife to rely upon the affidavit.
The Wife sought leave, which was granted, to adduce oral evidence form her current solicitor Mr Shane McDonald, touching on the reasons why the initiating application failed to acknowledge, at Part F, the existence of the said agreement. Mr McDonald says he made the decision not to refer to the agreement in either the application or accompanying affidavit. He said, he was aware of the existence of the agreement (having referred to it in a letter written to the Husband in October 2010), and thought “the onus” was on the Husband to plead the existence of a binding financial agreement. Little now turns on that evidence in these proceedings.
Apart form the Husband relying upon his affidavits filed and set out in his case outline, the Husband relied on an affidavit of Mr King, the solicitor who provided the advice to the Wife and signed the Certificate incorporated in the agreement. He was cross-examined by the Wife’s Counsel, Mr Curran.
After evidence was taken on 31 August 2011, written submissions were filed as follows by Counsel for the Wife, and Counsel for the Husband Mr Fleetwood, namely:-
- 14 September 2011 – Husband
- 4 October 2011 – Wife in response
- 12 October 2011 – Husband in reply
I have carefully considered those submissions. The Court regrets the delay in providing these published reasons.
The agreement
The agreement is Annexure “FVBI” to the Husband’s affidavit field 10 March 2011. A copy of the agreement is Appendix One to these reasons. The words are plain and it is not suggested that there were any variations to the agreement other than the words and figures handwritten in “Schedule 2”. Later in these reasons I refer to who I find wrote those words and figures, and when. The agreement records relevantly that:-
a)It was entered into “in contemplation of marriage” on 2 April 2006.
b)Contains 12 paragraphs by way of “Introduction” or recital including an expressed desire “to eliminate, as much as possible, any future impediment to their marriage which might arise from uncertainty or insecurity as to their financial responsibilities to each other” (clause 5).
c)Acknowledged “no undue influence, pressure or unfair tactics have been exerted on either of them or used by either of them or either of their lawyers against the other party” (clause 12).
d)The property set out in Schedules 1 and 2 attached to the agreement “is, and will after our marriage, remain the separate property of each of us free from any claim for division by the other … except as specifically provided for by this agreement” (clause 2.1).
e)Schedule One recorded that the Husband had estimated assets of $1,342,000; superannuation of $3,000; debts of $120,000 with a net total of $1,225,500. It is apparent the estimated total of $1,225,500 overstates the net property by $500 as detailed.
f)Schedule Two recorded the Wife had estimated assets of $34,500; superannuation of $1,000; debts of $1,000, with a net total of $36,500. It is apparent the estimated total of $36,500 overstates the net property by $2,000.
g)Clause 14 sets out what is to occur in the event of separation, including a very specific provision under clause 14.6.4 (oil painting) and 14.6.6 (if separation occurs after 14 years of marriage).
h)The agreement purports to provide that:-
“14.6.5
(i)Neither party will be entitled to make any further financial claim against the other of them pursuant to Part VIII of the Family Law Act.
(ii)17.1 This agreement is intended to replace all rights of both parties under the Family Law Act 1975 in relation to both property settlement and spouse maintenance pursuant to which no applications will be made by either party save for the enforcement of this agreement.”
i)The Husband agreed to pay the legal costs relating to the preparation of the “Deed” but both parties were to individually pay the costs of obtaining their own “independent legal advice”.
The Wife
Like the Husband and other witnesses, the Wife was in 2011 being asked to recall events that occurred some five years earlier – and at a time which was within a week of the planned marriage ceremony. I allow for the effect that the elapsed time and likely distraction of the marriage ceremony could have on her recollection, but even after doing so I found her demeanour less than impressive. She was on occasions non-responsive bordering on evasive. I was left with the strong sense that, although trying to accurately recall, her recollection was shaped by how she now wishes the facts were rather than what they might have been. The Husband causes me less concern as to his recollection.
In the end, the factual differences between the parties became less important to my decision than the evidence of the Wife and Mr King. I analyse those differences and my findings below.
The Husband
As already noted, much of the Husband’s evidence was unchallenged. Of course, he was unable to give any direct evidence of what occurred in the consultation between the Wife and Mr King. I deal later in these reasons with some of his evidence, so far as it is alleged the agreement should be set aside.
The solicitor Mr King
Mr King was admitted as a solicitor in February 1969. He had practised in the area of family law, however he said since about 1998 he had concentrated on “commercial, conveyancing, wills, estates and aviation law”. He said on 27 March 2006, the wife (then Ms Vance) came to see him at his firm in (omitted).
At this point it should be recorded that when the trial began on 9 August 2011, and after exchanges between the Bench and Counsel, the trial was adjourned to 31 August 2011. The directions made that day (in addition to requiring submissions as to the admissibility of the evidence of Mr G), granted leave to the Wife:-
“to issue a subpoena for the attendance at the trial at 10.00 on the 31 August 2011 to Mr King and to produce such documents in his possession, power or control relating to his consultation with the Wife on 27 March 2006.”
A subpoena was issued on 15 August 2011. In response, Mr King filed (but was not required to do so), a self prepared affidavit sworn 24 August 2011.
In the somewhat unusual way in which Mr King was called (and responded), I allowed Mr Curran for the Wife to effectively cross-examine his witness. Mr Fleetwood simply relied on the sworn affidavit.
I record that proper discovery reveals that Mr King made no contemporaneous note of his consultation with the Wife on 27 March 2006. Only after it seems he was contacted about his recollections and the prospect of him giving evidence did he prepare a note, which became Exhibit 1. The note is on file note paper inscribed with the name and particulars of the Wife’s current firm of solicitors. The note says:-
“ Retired 98
7/85 QLD
Qual 14.2.69 SYD
Graham Lawrence King DOB (omitted)
(omitted).
Graham Lawrence King DOB (omitted), (omitted). I remember her coming in and spent aprox ½ hour. I explained that the document meant she would have no rights under family law. That this would be in substitution and it would be better for the husband. At that stage I was not doing much family law I was practising mainly comerical law.
I have known the husband since 86/86 thru the (omitted) he subsequently became a client we had falling out when he did not pay a bill. I would not call him a friend.
Mr King 21/7/11”
It is, in my view, crucial to this area of the Wife’s case as to whether advice was given by the solicitor and the nature of that advice. In this regard, although the demeanour asserted recall and confidence demonstrated by the solicitor Mr King was impressive, it is troubling that a solicitor of his long experience failed to reveal any diary note or statement about the advice he gave to the Wife. It should be recalled that the Wife says she only spent 5 minutes with the solicitor.
Recently, in Hoult & Hoult (2011) FamCA 1023, Murphy J was determining a similar issue and, at [43] said:-
“The solicitor’s evidence was unsatisfactory in many respects. Not least of the concerns about her evidence was her admission that her file contained no diary notes, statements, correspondence or anything else in writing to which reference could be made in respect of the advice given to the wife. With respect, this seems to me extraordinary – not least because of the necessity dictated by s 90G for the solicitor to provide a signed statement as to the giving of the required advice and the litigation which has surrounded Part VIIIA of the Act (and s 90G in particular) and the potential for consequences for the solicitor personally.”
I agree with these comments.
However, as Chesterman J observed in Dew & Richardson (1999) QSC 192 at [10]:-
“I cannot accept it is a principle of law that whenever a solicitor and his client disagree about the terms of a retainer (or advice) and the solicitor has not made a written note of the communication the client’s evidence must be accepted. …
I approach the critical question on the basis that both client and solicitor, plaintiff and defendant, have an equal right to be believed. Which of their respective versions is to be accepted will depend upon the persuasiveness of their evidence as judged by surrounding, objective circumstances.”
It is trite to note, that each case must be decided on its own facts and evidence before it. Mr King acknowledged that when he was initially asked about the matter, his recollection was vague and Exhibit One was all he could recall at that time, with no access to the agreement.
Subsequently however, he was provided with a copy of the agreement which assisted his recall and allowed him to comfortably commit to his sworn evidence in his affidavit, after further recall “came back to him”.
The consultation between the Wife and Mr King on 27 March 2006
Although, as earlier recorded, I did not find the Wife an impressive witness, the recollection of the solicitor (who had retired from practice) was not perfect. Had, in the absence of a diary note or the like, he been able to recall every detail that would have caused me some concern. The Wife’s submissions are that the solicitor’s evidence is:-
a)at best, an attempt to reconstruct what he now thinks he should have done;
b)not accurate.
I do not accept this submission entirely.
I find that the Husband and Wife did discuss the Husband’s desire for a pre-nuptial agreement after they became engaged in early 2006. The Husband presented a letter to the Wife and a draft agreement after 4 March 2006. The Wife confirmed under cross-examination that she received a copy of the draft agreement on or about 8 March 2006. She recalls the letter saying she should get advice and complete the schedule as to her assets and liabilities. The Wife gave evidence that after reading the document she told the Husband she wanted an amendment to incorporate a provision “giving me some security (have a roof over my head) if he died”. Clause 13.3 of the agreement appears to do so.
I am satisfied that the Husband made an appointment for the Wife to see Reeslaw (Mr King) after he felt fees to be charged by another firm were too high. Although the Husband says he did not make an arrangement to pay fees for the Wife’s consultation, he did pay them. The Husband says he did this all “to help the Wife as she was new in (omitted)”. I am satisfied, that with the clear advice he acknowledges he received that the Wife had to get independent legal advice, he was also well aware he was “helping himself” as well by arranging the Wife’s appointment.
There is no suggestion that the Husband accompanied the Wife into the offices of the solicitor, Mr King. As to what occurred in that consultation, I find that:-
a)The Wife says the consultation took 5 minutes and that Mr King did not say “one word”. When pressed about this, the Wife retorted that Mr King “is a liar and is deliberately lying” and that he did not say “one word”. Mr King said he spent “approximately half an hour with her”. This is what he charged her for and was paid for (see Exhibit 2).
b)In circumstances where I find the Wife was completely untruthful about the length of the consultation, it is difficult, for more than a 5 minutes meeting for the Wife to concede the Mr King actually said anything.
c)I am satisfied he did, and further the Wife’s evidence is impossible to accept when she was forced to acknowledge that her initial evidence about the words and figures in Schedule Two being in the document when she attended the solicitor was incorrect. Mr King says, and I accept, that it is his handwriting and that the contents were written after he asked questions of the Wife and completed the Schedule in her presence before she signed. It follows that in my view, the Wife’s evidence about what discussions took place at the meeting with Mr King carry little persuasion, although she did say she thought the “pre-nup meant what was his was his; and what was mine was mine”.
d)In my view however, I must still be satisfied (on the balance of probabilities) on the evidence of Mr King that he gave the advice he claims he gave the Wife. In that regard, Mr King was strenuously cross-examined by Mr Curran for the Wife. I make the following findings about the advice he gave the Wife, shaped by the concerns already raised, but taking into account the evidence I heard at the trial.
e)The solicitor could not recall if it was morning or afternoon that he saw the Wife, but can recall she told him Mr Vance had told her to see me. The solicitor said he was surprised as he had last acted for Mr Vance in 2000 after which after which they had a “falling out” about fees. The Husband’s focus on fees demonstrated in his evidence makes the solicitor’s evidence perfectly believable.
f)At paragraphs 5-15 of his affidavit the solicitor deposed to the following words and conduct:-
“5.The Applicant produced to me a form of Financial Agreement between her and Mr Vance which had been prepared by Murdoch Lawyers of (omitted). A photocopy of that agreement has been shown to me today. She instructed me that she wanted me to read over the agreement with her and sign the certificate of advice annexed to the agreement.
6.I spent approximately half an hour with her. I read through the agreement and gave an explanation of the effect of each operative clause in the agreement to her.
7.I explained to her that if she signed the agreement and married Mr Vance the agreement would act in substitution for her rights and Mr Vance’s rights under the Family Law Act in relation to matters of property settlement and spousal maintenance.
8.I explained to her that if she signed the agreement and married Mr Vance the agreement would act in substitution for her rights and Mr Vance’s rights under the Family Law Act in relation to maters of property settlement and spousal maintenance.
9.I told her that her rights under the Act would most likely be considerably greater than under this agreement, that he rights to property settlement under the Act depended on a large range of factors including what property there was, who contributed to it, how it was acquired, the length of the marriage and the contribution as a wife and mother and a range of other matters.
10.I remember her saying that she knew the arrangement was to protect Mr Vance but she wanted to sign it anyway.
11.I told her that Mr Vance had made full and complete disclosure to her of his assets and liabilities and financial situation generally and that if he didn’t the agreement might be set aside.
12.I told her that the list of assets etc in Schedule 1 was what Mr Vance was disclosing and that I had no way of knowing if any of that was true.
13.I told her she had a similar obligation of disclosure and it was important for her to be accurate in disclosing her assets and liabilities.
14.To the best of my recollection, she instructed me that she wished me to sign the certificate of advice and that she did not require any further investigation or advice or assistance on my part.
15.The writing in schedule 2 is in my writing and I filled in the information on her instructions.”
g)When cross-examined particularly about certain clauses in the agreement he swore that:-
-he did not recall taking the Wife through clause 1-13 (Introduction);
-he paraphrased clause 2 of the agreement and cannot recollect whether he paused between each sub-clause or whether the Wife asked any questions;
-he says he dealt similarly with clauses 3 to 16, but spent a bit more time on clauses 17 to 19 making sure the Wife understood full disclosure was necessary and important.
-He indicated to the Wife he had no knowledge of the truth or value of the Husband’s assets and, as a result, did not ask her any questions about the business;
-He could not recall any questions she asked but says he told her the effect of the agreement was what was his was his and what was hers was hers.
The question to be answered is whether the evidence satisfies the Court that the Wife received independent advice about the:-
-effect of the agreement on the rights of the Wife; and
-the advantages and disadvantages for the Wife in making the agreement.
I am satisfied that the Wife was receiving independent advice. Any past connection between the solicitor and the Husband did not, in this case, reach a level that demonstrates the solicitor failed to act independently.
The terms of the agreement as a whole “spelt out” some of the advantages of certainty and clear arrangements for the future, even as the Wife sought, in the event of death. It is more the disadvantages” to the Wife in making the agreement. On balance, the solicitor I find gave advice that “it would probably be better for the Husband”. The solicitor was not required, in my view, nor was he able, to assess all the future financial permutations that this couple’s financial journey could take.
The disadvantages to the Wife were plainly that the Husband’s sizeable (by comparison to her own) asset base was being sought to be protected from future claims by her – however long the marriage.
Again, in Hoult (supra), Murphy J opines, and I agree, that the legislation does not prevent parties from being “perfectly free to make a bad bargain” (paragraph 63) and further at [65-66] says:-
“65.But, at least in the case of a pre-nuptial (i.e. s 90B) agreement, it is by no means clear what is contemplated by the requirement in s 90G that advice must be given as to “the advantages or disadvantages of the agreement at the time that the agreement was made”. That advice must, as it seems to me, depend, at least in part, upon the myriad of circumstances which may (or may not) arise in the course of the parties’ married lives (including, indeed, whether they separate at all, in which case the terms of the agreement providing for respective entitlements will not become operative). How is the justice and equity (in s 79 terms) of the agreement to be determined at the time it is signed if it does not become operative until separation occurs? If advice as to “the advantages and disadvantages” is not to be given by reference to prospective s 79 entitlements, what criteria or reference point or points are the measure of “advantage” or “disadvantage”? The terms of an agreement might be seen to be wholly just (or “advantageous”) if separation was to occur a week later and wholly unjust (or disadvantageous) if separation was to occur 25 years later. The terms of an agreement may be seen to be wholly just (or advantageous) if the parties have modest assets at the time it is made but be seen to be wholly unjust (or disadvantageous) should, 20 years later, one of the parties acquire very significant wealth. Permutations are innumerable.
66.A practitioner providing the required s 90G advice might, of course, feel more comfortable, or consider it prudent, to have a list of assets and liabilities so as to give the client examples of the permutations that might be possible and what may, or may not, be seen as “advantages” or “disadvantages” as a result. In addition, it might well be that advice which can be seen to be comprehensive in terms of a solicitor’s duties, or that which is desirable in light of s 90G’s ramifications, might have many components to which a list of assets and liabilities might pertain. The issue is not what prudence or practice might dictate, but what s 90G requires of any advice.”
I agree, with respect, with these remarks and adopt them. These agreements are in no way analogous with agreements formally to be registered under s.86 or approved under s.87 of the Act, in that the Court is not required to be satisfied the agreement is just and equitable to both parties.
In my view, I am satisfied that the solicitor Mr King gave the advice as required by s.90G(1)(b) and anticipated by the Act to the Wife, and about which he has duly certified. The certificate, of itself, was not enough, however the evidence of Mr King was in this case.
Summary of findings as to s.90G requirements
The “pleaded” relief sought was:-
“6.A declaration that the Financial Agreement dated 27 March 2006 is not binding as the procedural requirements of s.90G of the Family Law Act 1975 have not been complied with.”
Particulars
a)The Applicant was not provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of the Applicant and about the advantages and disadvantages, at the time that the advice was provided, to the Applicant of making the agreement.
b)The signed statement pursuant to s.90G(1)(c) provided by the legal practitioner to the Applicant was inaccurate.
c)A fully signed copy of the agreement and the statement of independent advice was not provided to the Respondent prior to marriage.”
As was noted in Senior (supra), a “distinction needs to be drawn between matters which might have an impact upon an agreement as a financial agreement and, on the other hand, matters which might impact upon whether that financial agreement is binding” (“Hoult”(supra) at [97]).
Neither party contends that the agreement is not a “Financial Agreement”.
I am satisfied that Mr King was both independent and a legal practitioner. To the extent that it was argued by Mr Curran in his submissions that Mr King might have not been “up to date” with his knowledge of family law, I see nothing in a requirement prescribed by the relevant section to impose any obligation on the legal practitioner to have either specialist or other qualifications in family law. The section requires, by inference, some knowledge of this area of law otherwise it would be hard to be satisfied that the practitioner could be able to articulate the “advantage and disadvantages” of the agreement or the effect of the agreement on the rights of the party being advised. Mr King did have some experience in family law over many years.
On the findings made above, the certificate was accurate. The Wife also conceded that she had received a fully signed copy of the agreement in October 2006 – although Annexure FVBI” to the Husband’s affidavit filed 18 April 2011, is a copy of a letter to the Wife dated 27 March 2006. In any event, there is no prescribed requirement for a copy of the signed agreement to be delivered “prior to the marriage”.
For the reasons stated, I find that the agreement is a binding financial agreement within the meaning of s.90G of the Act.
The Application under s90K
The Wife “pleaded” that:-
“That the Financial Agreement dated 27 March 2006 be set aside pursuant to s90K of the Family Law Act 1975”
Particulars
The Agreement was obtained by fraud including non-disclosure of material matters as these were assets of the Respondent which were not disclosed in the Agreement and the Respondent did not disclose that the solicitor he had arranged to provide independent legal advice to the Applicant was someone that he knew in a personal relationship.
The Agreement is void because the requirements of s90B and s909 of the Family Law Act 1975 have not been complied with.
The Applicant engaged in conduct that was, in all the circumstances, unconscionable in that he only varied the issue of entering into an agreement after the wedding was announced and all plans were made and exerted pressure and duress on the Respondent to enter into the agreement.”
Curiously, in submissions filed by Counsel for the Wife on 4 October 2011 in Response to the Husband’s submissions, not one submission was made against the propositions articulated in the Husband’s Counsel’s submissions filed 14 September 2011 (at paragraphs 26 to 65). In circumstances where that ground was not formerly abandoned by the Wife, the Court elects to deal with the issues on the evidence.
I rely on earlier findings which do not support the Wife’s contention that the solicitor Mr King was not independent.
Assertion that the Agreement was Obtained by Fraud
The Husband concedes that the Husband’s ownership of the three timeshare units are not specifically mentioned in schedule one to the agreement. I accept the Husband’s evidence that:-
a.He purchased them around 1984 – 1985 paying $3000 for each of one week at ‘(omitted)’ and $6000 for one week at ‘(omitted)’
b.He mentioned the rights to these time share locations to the Wife whilst they were dating including the cost of them. In this respect, I prefer the evidence of the Husband to the Wife
c.The Husband received an offer by letter dated 7 July 2011 to accept a “buy back” by the (omitted) Resort at a price of $500 per week. At the same time the Husband had notice of levies due to the Resort for the 2011-2012 year of $1298.00. The Husband says, on this basis, the time share rights have little value.
d.The Husband swears at paragraph 21, and I accept, his failure to disclose the time share interests in the Agreement at Schedule One was “unintentional” or inadvertent.
There are some conflicting authorities about whether inadvertent non-disclosure, if material, is sufficient to attract S90K(1)(a). At paragraphs 123 to 127 of HOULT (supra), Murphy J discusses earlier decisions of this Court in Blackmore & Webber (2009) FMCfam154 and Stoddard (2007) FMCfam735 and concluded that, of itself, “innocent” or “negligent” material non-disclosure is not sufficient to amount to fraud for the purposes of s90K(1)(a). As I received no submissions on this point, and because of the view I have taken that the failure to mention the time share rights was not material, I do not come to a concluded positions although my preliminary view is that the analysis undertaken by Murphy J is persuasive.
The value of these timeshare rights known to exist by the Wife, are in the totality of the proper disclosure by the Husband of net assets of $1,225,000 not material and not capable, in this case, of attracting the protection of s90K(1)(a).
I have already observed no failure to comply with s.90G has been proved.
Unconscionable Conduct
The particulars of the Husband’s “unconscionable conduct” are brief and assert that “he only raised the issue of entering into an agreement after the wedding was announced and all plans were made”. Additionally it is asserted that the Husband “exerted pressure and duress on the Respondent to enter into the Agreement”. No particulars are “pleaded” as to how the pressure was exerted or what was the nature of the duress applied to the Wife.
The evidence of the Wife is that on 31 January 2006 an engagement ring was purchased. In the absence of any other corroboration, this is the first evidence of the joint intention to marry in the future. The Husband says he then attended an appointment at Murdoch Lawyers on 14 February 2006 and took advice about protecting the property which he had built-up for the benefit of the three children of his prior relationship.
I am satisfied the Husband first mentioned his desire for a pre-nuptial agreement after his initial appointment with his solicitors. I further accept the evidence of the Husband at paragraph 18 of the Affidavit filed 3 August 2011 that:-
“18. When we first got engaged we talked about a June 2006 wedding. I thought this would give us time to prepare. She said that was not going to work due to Church camp preparations. She suggested May 2006. A few days later she rang and said that was not good either and 2 April 2006 would suit her better. I responded you might as well make it the 1 April 2006. We went with 2 April 2006. This date was set some time around Christmas time, when we decided upon the engagement ring”.
Under cross examination the Husband firmly said he told the Wife he wanted a pre-nuptial agreement “After the engagement” and that his recollection was that the parties discussed the agreement before setting a wedding date.
The time available between the purchase of the ring (31 December 2005) and date of marriage (2 April 2006) ultimately agreed upon was short. The wedding was a small affair. The parties were a mature aged couple who shared a similar faith and had, on the Wife’s case, been friends since early 2005 and commenced a relationship in November 2005. The descriptor of a “whirlwind romance” would be apt.
Because of the short time available to the wedding date agreed, it is reasonable to infer that both parties were under some pressure. There were a number of things to organise. The Husband gives credit to the Wife for doing most of the planning of the ceremony.
The Wife had time to look at the first draft of the document; suggest some change in case of the Husband’s death; and then attend on Mr King. Although the Wife said she felt like she didn’t have a choice, the overall tenor of her evidence was that she trusted the Husband so she didn’t slow the process. Importantly, the Wife in cross examination said she never told the Husband before she signed the agreement that she felt under pressure.
The Wife does not say that the Husband ever said to her, words to the effect “If you don’t sign there will be no wedding”. By its very nature, the Wife (I am satisfied) knew she was asked to sign a “pre-nup agreement” – namely an agreement before the nuptials take place.
Certainly it is unclear what the Husband’s position would have been had she decided on 27 March 2006 to refuse to sign the agreement. That she did not refuse to do so, is in my view, in these circumstances a reflection of her strong wish to marry – not of the alleged pressure exerted by the Husband.
I am not satisfied there was an unconscionable behaviour by the Husband such that the agreement should be set aside under s90(K).
Furthermore no evidence of “duress” is offered.
Therefore the Wife’s application to set aside the agreement must fail.
Conclusion
For the reasons which precede this conclusion, I propose to make a declaration that the financial agreement made on 27 March 2006 pursuant to s.90B of the Act is a binding financial agreement within the meaning of s.90G of the Act.
All other applications of the Wife shall be dismissed.
The Husband’s amended response seeks an order that the Wife pay the Husband’s costs on an indemnity basis. Although the parties appear from the material filed to be in very different financial positions, if the Husband wishes to pursue that application for costs then he must file and serve within 21 days written submissions in support of the Application, after which the Wife shall file and serve written submissions in Response within 42 days from this Order.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Baumann FM
Date: 22 June 2012
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