Wallace and Stelzer
[2011] FamCA 54
•31 January 2011
FAMILY COURT OF AUSTRALIA
WALLACE & STELZER [2011] FamCA 54
FAMILY LAW – PROPERTY – FINANCIAL AGREEMENTS – Consideration of Financial Agreements under part VIIIA of the Family Law Act - Constitutional validity of Federal Justice Systems Amendment (Efficiency Measures) Act (No.1) 2009 - Scope and nature of that amendment to the Family Law Act - s 90G - Equitable rectification of a Financial Agreement - allegations of fraud and/or unconscionable conduct - interest.
Family Law Act 1975 (Cth) ss 71A, 79, 86, 86A, 87, 90G(1A), 90G(1)(b), (c) and (ca)
Family Law Amendment Act 2000 (Cth)
Family Law Amendment Act 2003 (Cth)
Family Law Rules 2004 (Cth)Judiciary Act 1903 (Cth) s 78A
Federal Justice Systems Amendment (Efficiency Measures) Act (No.1) 2009 (Cth)
Supplementary Explanatory Memorandum to the Federal Justice System Amendment (Efficiency Measures) Bill (No.1) 2008 (Cth)
New South Wales Barristers’ Rules (NSW)
The Australian Constitution 1901(Cth) s 51 (xxii) and (xxxi)
Black v Black (2007) 36 Fam LR 680
Black v Black (2008) FLC 93-357
Briginshaw v Briginshaw (1938) 60 CLR 336
Cross v Beaumont [2007] FamCA 123
Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
J v J [2006] FamCA 442
Liyanage v The Queen [1967] 1 AC 259
Murphy v Murphy [2009] FMCAfam 270
Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155
Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495
Parker v Parker [2010] FamCA 664
Polyukhovich v The Commonwealth (1991) 172 CLR 501
R v Kidman (1915) 20 CLR 425
Ruane v Bachmann-Ruane & Anor [2009] FamCA 1101
Senior v Anderson [2010] FamCA 601
S v S (unreported judgment delivered 11 December 1991: Baker, Lindenmayer and Rourke JJ, Full Court of the Family Court of Australia)
Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166
Sutton v Hutchinson [2005] EWCA Civ 1773 (9 November 2005)
The Queen v Humby; Ex Parte Rooney (1973) 129 CLR 231
Trade Practices Commission and Another v Tooth & Co Limited and Another (1979) 142 CLR
Wynona v Friend [2011] FamCAFC 6
APPLICANT: Mr Wallace
RESPONDENT: Ms Stelzer
INTERVENER: Attorney-General for the Commonwealth of Australia
FILE NUMBER: SYC 5433 of 2007
DATE DELIVERED: 31 January 2011
PLACE DELIVERED: Hobart
PLACE HEARD: Sydney
JUDGMENT OF: Benjamin J
HEARING DATE: 23, 24, 25 & 26 August and 11, 12 & 13 October 2010 REPRESENTATION
COUNSEL FOR THE APPLICANT: Mr Rayment Q.C. with
Mr Washington
SOLICITOR FOR THE APPLICANT: Mr Hall, Hall & Partners
COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC with
Mr Gould (for parts of the trial) and Ms Barker (on 26 & 27 August 2010)
SOLICITOR FOR THE RESPONDENT: Ms Searle, Searle & Associates
COUNSEL FOR THE ATTORNEY -
GENERAL:
Mr Orr S.C.
SOLICITOR FOR THE ATTORNEY -
GENERAL:
The Australian Government Solicitor
Barton ACT 2600
Orders
1.A DECLARATION that the financial agreement dated 29 September 2005 between Mr Wallace (the husband) and Ms Stelzer (the wife) is an enforceable financial agreement under the provisions of the Family Law Act 1975 (Cth).
2.A CONSEQUENTIAL ORDER that within twenty eight (28) days from the date of this order, the husband pay to the wife the amount of $3,150,000 plus interest calculated as follows:-
(i)From 13 July 2007 to 1 March 2010 at a rate of 6.5 per cent per annum.
(ii)From 2 March 2010 to the date of payment interest in accordance with the rate determined pursuant to the Family Law Rules 2004 (Cth).
(iii)Interest is to be calculated on $3,250,000 until the date the husband paid $100,000 to the wife (in two sums each of $50,000), including part paid pursuant to orders made by this Court in about 23 August 2010 and thereafter interest on the sum of $3,150,000 until paid.
3.Leave is given for the parties or either of them to apply in respect of order 2 in terms of the date of payment of the two amounts of $50,000. Such leave to apply for twenty (28) days from the date of this order.
4.Upon the husband complying with orders 1 and 2 above, the wife shall forthwith resign from her position as trustee and in respect of any office she holds in S Pty Ltd, in regard to the property at W and the wife shall, as soon as is practicable after that time, sign all documents and do all things to assign any interest she has in that property to the husband or his nominee. The husband to be liable for and shall indemnify the wife against any taxes and/or duties arising from this order.
5.All outstanding applications, except for costs, are dismissed.
6.This matter be removed from the list of cases requiring determination.
7.All subpoenaed documents are to be returned to the persons or institutions from which they emanated and all exhibits are to be returned to the person or persons who tendered the same.
IT IS CERTIFIED
8.Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage counsel and senior counsel to attend.
IT IS NOTED
9.Each of the parties sought orders for costs.
10.Having regard to the findings set out in the reasons; the Court did not need to make an order for rectification of the agreement in accordance with the Family Law Act1975 (Cth), however, had that have been necessary such an order would have been made.
11.As an alternate Order, the wife sought a declaration pursuant to s 90G of the Family Law Act 1975 (Cth) and Item 8A in Schedule 5 of the Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 in relation to the financial agreement. Had that been necessary, such an order would have been made.
IT IS DIRECTED
12.In respect of each of the parties’ costs application these are listed for hearing and argument before me at 3.30pm on Monday 18 April 2011 at Sydney.
13.Each party shall file and serve the outline of their costs submissions and any further affidavits on or before 4.00pm on 18 March 2011 (if either party fails to file an outline of their costs submissions in accordance with this direction that parties application for costs will be deemed abandoned).
14.Each party shall file and serve, if necessary, a response to the other parties’ costs submission on or before 4.00pm 1 April 2011.
IT IS NOTED that publication of this judgment under the pseudonym Wallace & Stelzer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
FAMILY COURT OF AUSTRALIA AT HOBART FILE NUMBER: SYC 5433 of 2007
MR WALLACE Applicant
and
MS STELZER Respondent
REASONS FOR JUDGMENT
INTRODUCTION
1.Mr Wallace (“the husband”) and Ms Stelzer (“the wife”) married in October 2005. On 29 September 2005, a short time before their marriage, the parties executed an agreement which, at that time, they asserted was a financial agreement (“the Agreement”) pursuant to the Family Law Act 1975 (Cth). The parties’ stated intention was to put in place an arrangement for the division of property in the event that their, soon to be celebrated, marriage failed.
2.In the Agreement the parties purported to:-
(b)Enter into an agreement under s 90B of the Family Law Act 1975 (Cth).
(c)Exclude the power of a court having jurisdiction under the Family Law Act1975 (Cth) to make orders relating to financial matters between the parties.
3.The Agreement provided that the husband pay the wife $3,250,000 if their marriage broke down within four years of the date of the marriage. There is no issue that the marriage failed within two years of its celebration.
4.The Agreement included other clauses which provided that each party would retain the property which they already owned and made provision for the adjustment of shared property. The Agreement also contained machinery provisions and provided for the division of furniture.
5.As at the date of the hearing, the parties agreed that the husband had superannuation property and other property with a present value of $16,485,372. Of that sum, $663,152 was contained in a superannuation fund. The husband had a financial resource in terms of money due to him from his late father’s estate of about $200,000. He had liabilities of about $2,000. The wife had assets totalling $10,774.
6.The wife’s case was that the Agreement was binding and that the husband’s application ought to be dismissed and that there needed to be an order that the husband pay the amount due to her under the Agreement, interest and her legal costs.[1] Alternatively, if there was a fault with the Agreement then it ought to be rectified under s 90G(1A) by way of a declaration from the Court, or alternatively, that there be equitable rectification in relation to the certificate.
[1] The final costs issues have not been argued. If such issues remain contentious an application will need to be made in accordance with the Rules.
7.The wife’s final approach was that if the Agreement was not binding then she should receive at least 25 per cent of the asset pool, which would total approximately $4,120,000.
8.The husband claimed that the Agreement was fatally flawed in that the certificate annexed to the Agreement was incorrect and that error could not or should not be remedied. Senior counsel for the husband submitted that the 2010 amendments to the Family Law Act 1975 (Cth) were:-
·A constitutionally invalid exercise of the legislative power; and
·if the legislation was valid, it did not cure the flaw in this agreement as it was not possible to cure this problem.
9.What was not argued, and therefore was not an issue, was that there was a minor amendment to the Agreement and whether that amendment would impact on the validity of the Agreement.
10.The husband submitted that if the Agreement was binding that it ought to be set aside under s 90K of the Act as there was fraud and/or unconscionable conduct on the part of the wife. The husband claims that the wife said to him at the time that the Agreement was being negotiated (and after an alleged short separation earlier in 2005) that she loved him, wanted to have children with him and wanted to live with him for the rest of her life. Senior counsel for the husband submitted that these and other alleged statements and/or modes of behaviour constituted evidence of fraud by the wife and/or amounted to unconscionable conduct on her part.
11.The husband has the onus of proof in respect of the alleged fraud and/or alleged unconscionable conduct. Such onus of proof must be the civil standard having regard to the comments of Dixon CJ in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362, where he said:-
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.’
12.I have adopted that approach in terms of the allegation of fraudulent misrepresentations and/or unconscionable conduct.
13.The first question for me to determine is whether the Federal Justice System Amendment (Efficiency Measures) Act (No. 1)2009 was a valid exercise of the legislative power of the Commonwealth, having regard to the husband’s challenges in respect of the constitutional validity of that legislation.
14.If the amending legislation is constitutionally valid, does the Act now either cure the defect in the Agreement or enable a cure to the defect in the Agreement? In that regard the amendments to the Family Law Act1975 (Cth) pursuant to the Federal Justice System Amendment (Efficiency Measures) Act (No. 1)2009 provided direction in s 8A of that Amendment Act. In addition, s 90G(1A) of the Act enables a court to declare that an agreement is binding in certain circumstances if there was not strict compliance with s 90G(1)(b), (c) and (ca). If all else fails, it was submitted by senior counsel for the wife that the Agreement could be rectified by way of equitable principles. Senior counsel for the husband contended that it was not open for equitable principles to be used to rectify the Agreement.
15.If I find that the Agreement is valid under s 90G of the Act are there circumstances in which the Agreement may be set aside under s 90K of the Act, by reason of the alleged fraud and/or the wife’s alleged unconscionable conduct?
16.If the Agreement is either found not to be binding or is set aside then the Court would need to determine the division of property between the parties pursuant to Part VIII of the Act.
17.The wife seeks interest on the amount due under the Agreement. Such interest is to be calculated from 18 April 2007 and be in accordance with the rates of interest prescribed under the Family Law Rules 2004 (Cth). This would only apply in the event that the Agreement was found to be enforceable and not otherwise set aside. The husband opposed any order for interest and there was a question as to whether that interest should be at the ‘penalty or punitive rate’ prescribed under the Rules of Court or whether it should be at some other rate.
18.Factual matters raised in these proceedings included:-
(a)Whether the husband and/or the wife received any advice or adequate advice (if adequate advice is necessary) as required by s 90G(1)(b) as to the effect of the financial agreement on the rights of the parties and the advantages and disadvantages, at that time, in respect of each of the parties making the agreement.
(b)The nature of the relationship, including contributions made by each of the parties between mid 1998 and the date of their marriage.
(c)What were the arrangements with regard to the Agreement including the extent of negotiation for and about the Agreement?
(d)Whether the wife made false or fraudulent representations, which amounted to fraud and/or unconscionable conduct, to the husband shortly before the marriage to induce him to sign the Agreement.
(e)If the Agreement is not binding or was set aside, what are the contributions of the wife and the husband and the other factors (including the s 75(2) of the Act’s factors) and therefore what adjustment ought to be made on contribution and what further adjustment, if any, should be made in respect of the other factors?
19.In relation to the husband’s assertion that he was not served with a copy of the Agreement, this was ‘gently’ pressed by senior counsel for the husband. In evidence the husband conceded he had a copy of the original Agreement. On the basis of that evidence, that aspect of his application cannot succeed.
20.The husband sought leave to file an updated affidavit on 24 August 2010, and leave was given to him.
BACKGROUND
21.At the date of hearing the husband was aged 55 (almost 56) and the wife aged 42.
22.The husband had been previously married and separated at about the time he commenced a relationship with the wife. He has three children of his first marriage, C aged 23, L aged 21 and G aged 16 (at the commencement of the hearing).
23.The husband separated from his first wife in about May/June 1998. He says that in May 1998 he met his second wife at an adult entertainment venue located in Sydney and where he says the wife was working as a dancer. The wife took no issue with that assertion in her affidavit filed 19 August 2010, although she was somewhat anxious with that job description during her evidence. In any event that meeting was such that, for these parties, their stars aligned. They travelled overseas and soon commenced living together. Unhappily, after some years together that celestial alignment dissipated as did the parties’ marriage and their relationship.
24.For the husband, the basis of the commencement of the relationship and to some extent even their intimate and personal interactions were put in evidence and in issue. He alleged that the wife fraudulently induced him to execute a financial agreement and/or that her conduct at the relevant time [being the time just prior to entering into the Agreement] amounted to unconscionable behaviour such as would enliven the Court’s jurisdiction to set the Agreement aside. The husband said that the wife made a series of express and implied promises so as to induce him to enter into the Agreement. His case was flavoured by implicit and explicit criticism of the wife. At many levels this criticism seemed to endeavour to demean her and their relationship bearing in mind the wife’s initial occupation and the circumstances of their meeting. This approach and that of the allegation of the fraud and/or unconscionable conduct can be seen as an allegory of the ‘tantalising’ description of the occupation alluded to by Lord Justice Ward in Sutton v Hutchinson [2005] EWCA Civ 1773 (9 November 2005).[2]
[2] Lord Justice Ward said of this occupation ‘[the] appellant is a lap dancer. I would not, of course, begin to know exactly what that involves. One can guess at it, but could not faithfully describe it. “The Judge tantalisingly tells us, at paragraph 21 of his judgment, that the purpose is "to tease but not to satisfy".
25.The husband deposes in his financial statement that he pays $498 per week for the support of his children C and G.
26.The husband and his first wife commenced property proceedings in the Family Court in about 2002. Consent orders were made in July 2004 and the husband’s marriage to his first wife was dissolved in August 2004.
27.In June and/or July 2005 these parties lived primarily in separate homes for three or four weeks. The extent and nature of that alleged separation is a matter for a finding of fact later in these reasons.
28.On 29 September 2005 the parties entered into the Agreement and each of the parties asserted, in that Agreement, that they were independently advised. The parties married in October 2005. I am satisfied that each relied upon the other’s assertion in that regard.
29.In April 2007 the parties had been having difficulties in their relationship and the husband sent a letter to the wife. In May 2007 the wife moved out of the matrimonial home and the parties separated at about that time.
30.These proceedings have had a long and difficult path to hearing. The proceedings had been previously listed for hearing before or in the dockets of two Family Court Justices but for differing reasons those Judicial Officers decided to recuse themselves from the final hearing.
31.The proceedings were placed into my docket in late 2009 and in early 2010 the nature of the proceedings changed as a consequence of commencement of the relevant provisions of the Federal Justice System Amendment (Efficiency Measures) Act (No. 1)2009 which was a legislative amendment to deal with an approach adopted by the Full Court in Black v Black (2008) FLC 93-357.
32.At the commencement of the hearing the wife sought an order for costs to assist her in relation to the proceedings. She relied upon an affidavit of her instructing solicitor, Deborah Searle. I raised with the parties, at that time, my concern in respect of the matter if Ms Searle’s evidence was contentious as I had some years ago served with her as a counsellor on the Law Society of New South Wales. If her evidence was contentious that may have been a problem. Senior counsel for both parties indicated that there was no issue in respect of Ms Searle’s evidence for the purpose of the costs argument and as such I determined that issue.
33.The consequence of that determination was that the wife received a costs order of $50,000. The husband had previously paid to the wife the sum of $50,000. I have credited those sums against the amount that the husband is ultimately liable to pay. These sums amounted to the wife having access to matrimonial funds to which she was otherwise entitled[3]. I gave reasons in respect of that order on 23 August 2010.
[3] Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166.
34.In these reasons any statement of fact is to be regarded as a finding of fact unless the contrary is clear from the context.
THE RELEVANT LEGAL PRINCIPLES TO BE APPLIED IN TERMS OF PROPERTY ADJUSTMENT – IF I ARRIVE AT THAT POINT
35.The Full Court in Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at page 78,386 reiterated the preferred approach to the exercise of discretion in property matters, pursuant to s 79:-
39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
40. Section 79, unlike s.78, requires the Court to consider the whole of the property of the parties, however and whenever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property. As a consequence of the first step in the preferred approach to the determination of the s.79 proceedings, each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto: Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Tate v Tate (2000) FLC 93-047.
36.Thus the approach in a property determination involves a number of steps:-
a.The identification of the property and its value;
b.An evaluation of the parties’ contributions having regards to ss 79(4)(a),(b) and (c) of the Family Law Act 1975(Cth) (“the Act”);
c.Consideration of any adjustment to that assessment having regard to the relevant matters in ss 79(d),(e),(f) and (g) of the Family law Act (“the other factors”) including the matters referred to in s 75 (2) of the Act;
d.A review of the outcome against a just and equitable requirement.
WITNESSES
The wife
37.The wife gave evidence in terms of her affidavits filed 28 July 2010 and 19 August 2010. She also gave evidence in accordance with her financial statement filed 28 July 2010.
38.The wife is presently not in paid employment and lives in a de facto relationship with Mr Y. She lives in rented accommodation in Sydney. She has a small amount of money in the bank, a modest motor vehicle and modest superannuation. Her assets total about $10,000.
39.She gave her evidence frankly and thoughtfully. She conceded that she may have had some difficulties with precise dates and when challenged about dates promptly conceded those. At times she asserted she could not remember some facts.
40.I was generally impressed with her evidence. She endeavoured to tell the truth from her own subjective point of view. I am satisfied that her evidence is generally reliable.
41.She gave evidence of maintaining various homes, and at times this meant two homes. The husband purchased a property at M and owned or controlled a home unit property at W. The wife had some domestic assistance (including from her mother from time to time) but I am satisfied she undertook the role of housekeeper and homemaker, and that this was a significant contribution over a period of about 9 years.
42.The wife was cross-examined at length about the circumstances of the parties’ unhappiness around June/July 2005. The wife was uncertain about dates in terms of the sale of M property (at about that time) and the purchase of a home at H (at about that time). The parties were having some relationship difficulties at that time. I am satisfied that the parties’ communication diminished and that the husband for a period of three to five weeks lived primarily at W and the wife lived primarily at M. The communication between the parties existed but was at that time limited. I accept the evidence of the wife that she travelled on a number of occasions to the apartment at W and cleaned, and tidied that apartment and undertook some laundry duties. Senior counsel for the husband spent considerable time cross-examining the wife in relation to miniscule issues of dates and times. Overall, I am satisfied the wife kept in contact with the husband during the period of three to five weeks when they were in some degree of conflict and that she cleaned and assisted in maintaining both the properties at W and M. In addition, at that time, the parties were looking at moving one of their homes from M to H.
43.The parties’ relationship was under some pressure and they were contemplating whether they would bring their relationship to an end or whether it would continue. I am not satisfied that it was a separation, although the parties’ relationship was strained for that three to five week period.
44.Over this period of time, the parties had some discussion about what would happen if the relationship came to an end and there was some discussion about the husband buying the wife a home in the Southern Highlands area.
45.The parties resolved these difficulties in late July or early August 2005 and almost immediately afterwards commenced putting in place arrangements for their October 2005 wedding.
46.I am satisfied that the arrangements for their wedding were put in place in July/August 2005, the husband and wife had been living together for a number of years and there was nothing remarkable or unusual about them desiring to change their relationship to a different status. The wife says, and I accept, that she loved the husband (at that time) and she was committed to their relationship.
47.I have no doubt that the husband and wife discussed marriage on a number of occasions during their relationship including both before and after the events in June/July 2005. The wife did not initially require a financial agreement that was a requirement of the husband. However, after taking legal advice (subsequent to the husband’s legal practitioner preparing a draft agreement) the wife joined the husband in insisting on a financial agreement prior to marriage. The need for a financial agreement was something that the husband had contemplated for at least six months prior to his marriage to the wife. In the recital attached to his first draft agreement (which I am satisfied on the evidence that he approved) it provided:-[4]
Both parties agree that one would not marry the other until this Agreement becomes binding.
[4] Exhibit W3 Recital P.
48.I am satisfied that this was the husband’s view which the wife eventually concurred. In conversations the wife had with her then solicitor, Mr Smith, the wife said:-
I will not be walking down the aisle unless there is an agreement signed.
In terms of this evidence, I accept that that the husband had previously said to the wife that he would not marry her unless there was a financial agreement in place and that there needed to be an agreement reflecting their negotiations.
49.The parties entered into robust negotiations as to the amount to be paid to the wife in the event that the relationship failed. Following these discussions and negotiations the parties entered into the Agreement. Having regard to the evidence, I am satisfied that both parties entered into the Agreement voluntarily, after serious and considered reflection and in accordance with their then desires and intent.
50.The wife said the intimate relations between the husband and her did not materially change from their general nature from the time in the medium period before their marriage (and the Agreement) to after the marriage, but before the relationship began to sour in late 2006 and early 2007. I accept her evidence in that regard. The husband tried to establish that the wife used the reconciliation and/or parts of their intimate relationship and promises (including that of children) to fraudulently and/or unconscionably induce the husband to enter into the Agreement. I do not accept the husband’s evidence in that regard.
51.The wife was cross-examined in relation to sleeping in other rooms whilst at M and later at H. I am satisfied that the wife slept in another room from time to time, at least until shortly before separation, as the husband snored in a manner which inhibited the wife from achieving a good nights sleep. I do not accept that it was evidence of a diminution or derogation from the parties’ intimate relationship, as alleged by the husband. He asserted that the wife induced him to sign the Agreement by use of their intimate relationship, presumably in the days, weeks and/or months before the Agreement was executed. I do not accept his evidence in that regard.
52.Senior counsel for the husband cross-examined the wife in relation to the number of nights that the telephone records showed that they were either in W or M. On those figures it appeared that the parties were only living together 40 per cent of the time. However, this has to be seen in the context of a number of matters. The first is that the parties were communicating, poorly, at best, for about three to five weeks in June/July 2005. I am satisfied that the telephone records were simply indicative of the then strained relationship combined with the particular nature of the parties’ living arrangements, which involved them living in two homes.
53.The wife was cross-examined about some telephone calls she made to Mr Smith, her then solicitor, on the day before the wedding. The wife explained that she had sent him a gift and wanted to make sure it arrived. That is reflected in terms of the three very short telephone conversations on 30 September 2005. I accept the wife’s evidence in that respect and I am satisfied that the call or calls were nothing more than a courtesy call from a satisfied client, when work was to be done quickly.
54.The wife denied that she said to Mrs N that she was only going to stay in the marriage for five years and that she was going to have five husbands. I am not convinced it was said at all, and if said, it would have been in a light-hearted manner.
The husband
55.The husband relied upon his financial statement filed 23 June 2010 and his affidavits filed 21 August 2007, 22 February 2010, 4 March 2010, 23 August 2010 and 24 August 2010.
56.The husband was not an impressive witness. From time to time he prevaricated in giving his evidence. An example of this was his comments in relation to the notes he made on the draft agreement.[5] He had a tendency to reconstruct his evidence to suit his case.
[5] Ibid.
57.In the husband’s affidavit filed 22 February 2010 he said that he went to the office of his solicitor, Mr Samews, at about 3.30pm on 29 September 2005. He said he was only in the office for about three minutes and did not read the Agreement but signed it. He said Mr Samews presented him with the Agreement, handed him a pen and said “that’s an awful lot of money”. The husband replied “yes” and signed the Agreement. The husband said he had not received the advice contemplated by the Family Law Act to base the Agreement.
58.When cross-examined by senior counsel for the wife, the husband denied that he was given advice as asserted by Mr Samews in respect of the Agreement.
59.The husband’s denials in this regard need to be seen in context. Firstly, the husband instructed Mr Samews, in early August 2005, to prepare a draft financial agreement.[6] That agreement was prepared on the husband’s instructions and, on the husband’s evidence, involved an allowance to the wife of about $3,250,000.
[6] Annexure B to affidavit of Mr Smith filed 19 September 2008.
60.There were discussions between the husband’s solicitors and the wife’s solicitor, Mr Smith, in relation to the Agreement. As a result, Mr Smith submitted an agreement drafted by him.
61.As to the first agreement drafted by Mr Samews, the husband said, in essence, that it was a “template” agreement and the substance of it did not contain his instructions. A careful reading of the substance of the Agreement (as shown by the cross-examination of the husband by senior counsel for the wife) was such that that was not reliable evidence. The substance of the Agreement reflected significant input by the husband. The evidence of the husband in relation to that aspect was unreliable. Much of the information contained in the draft agreement would not have been available to Mr Samews without the husband’s input and specific instructions.
62.The Agreement drafted by Mr Smith was the subject of intense scrutiny by the husband. The draft with the husband’s comments on them[7] showed that the husband was very concerned about the content of that Agreement. The husband was concerned about the commencement of cohabitation (he changed May 1998 to June 1998), the amount of time he spent with the wife (he put four out of seven days) and other aspects of the Agreement. I am satisfied that he read the Agreement and was familiar with the substance of it.
[7] Exhibit W3.
63.It is significant that the Agreement contained the following assurances made by the parties to each other and in a broader sense, namely:-[8]
[8] Exhibit W1 the original financial agreement.
Recital E[The parties] have cohabitated with one another since May 1998 and remain living together.
Recital HThe parties acknowledge that:
i.This agreement is executed in duplicate;
ii.That after this agreement is executed it is intended that one party will take the original agreement and the other party will take an executed copy;
iii.No other agreement is in force under Section 90B, 90C or 90D of the Act in respect of the parties.
…
The husband had a copy of the signed Agreement in his possession at the commencement of these proceedings.
Recital O[The parties] intend to marry [in] October 2005 and this agreement is conditional upon the marriage taking place within two years of that date.
Recital PBoth parties agree that one would not marry the other until this agreement becomes binding.
Recital QBoth parties have been discussing their intention to enter this agreement for a period of twelve (12) months[9].
[9] This is consistent with the parties’ evidence and on the husband’s evidence for at least six months.
…
Recital S[The wife] has not sought to advise, guide, direct, control or pressure [the husband] into accepting the terms of this Agreement, nor sought that [the husband] rely upon her trust or confidence.
…
Recital WEach party has sought, obtained and given due consideration to individual and independent advice, separate qualified legal practitioner and prior to executing this Agreement as to matters including but not limited to:
iThe effect of this Agreement on the rights of each party to apply for property and maintenance orders under the provisions of the Act and as amended and otherwise to seek relief in law and in equity;
iiThe advantages and disadvantages at the time the advice was provided, for each party to enter into this Agreement.
64.In the draft agreement,[10] the husband wrote the word “no” in relation to the twelve months (discussed in recital Q) and his evidence was that the parties had been discussing their intention to enter into the Agreement for six months. It makes little difference and I am satisfied the parties had been contemplating a financial agreement for at least six months and probably twelve months prior to the date of the Agreement.
[10] Exhibit W3.
65.I am satisfied that the parties’ assertions, as set out above, in that Agreement were true. The husband is a successful businessman. He was aware that each of the parties was separately advised and represented. He examined this Agreement in some detail. The parties engaged in robust negotiations.
66.The husband, through his own endeavours, has accumulated a large asset base using his business skills including negotiations and entering into agreements. I am satisfied, given his past commercial success, that he has experience in negotiations.
67.The husband deposed in his affidavit filed 21 August 2007 the following:-
6.During the period of approximately six (6) months prior to the celebration of my marriage to the wife, I had discussions with her on a number of occasions relating to the preparation of a Prenuptial (sic) Agreement. One of the reasons for those discussions was that I had been through a protracted and messy property settlement with my former wife. The Prenuptial (sic) Agreement is the subject of my application filed in these proceedings on 2 August 2007 was signed on 29 September 2005 after a conversation with the Wife during which she said words to the effect: “If you don’t sign this Prenuptial (sic) Agreement I won’t marry you”.
68.In his affidavit filed 22 February 2010, the husband added to that statement and said a conversation ensued as follows:-
7.On 28 September 2005 at about 4-5.00pm at [W] I had a conversation with the Applicant [the wife] in which I said to her words to the effect “I don’t want to pre-nup, I am happy to marry you without a pre-nup as it is all too hard negotiating with you. You weren’t happy with the initial amount on the ramp up period.
8.The Applicant [the wife] then said to me words to the effect “well I am not marrying you without you signing this pre-nuptial agreement, I have already signed my copy. Just sign it, everything will be ok, don’t worry. I am not going to leave you, I love you and I want to have your children.
9.I was very favourably wishing to have children with the Applicant wife and to start a family with her.
10.After this conversation, I signed the pre-nuptial agreement. The wedding was already planned and organized to proceed by this stage, very shortly thereafter.
69.Some aspects of this later evidence have a sense of reconstruction. As at 4.00pm to 5.00pm on 28 September 2005 the husband’s evidence was that the Agreement in terms was settled and that the wife had signed the Agreement.
70.The husband knew the terms were settled before the wife went to her solicitor’s office and he was informed that the wife had signed the terms agreed earlier that day.
71.The husband complained about the “ramp up” period. The initial proposal by the husband was that the wife received assets to the value of about $3,250,000 and he “ramped this down” and then it “ramped back up again” later on.
72.I am satisfied that the husband instigated the discussions about a binding financial agreement. I am also satisfied that there were negotiations between the parties and that the amount that the wife was to be paid had been the amount that the husband first offered in the Agreement prepared by his solicitors in early September 2005.
73.I am satisfied that the husband wanted a pre-nuptial agreement, negotiated that Agreement over six to twelve months before September 2005 and entered into the Agreement the terms of which he was fully aware.
74.I reject the husband’s evidence that he was not given any or adequate legal advice. I accept the assertion the husband made in the Agreement that he received advice in accordance with the provisions of s 90G of the Act.
75.The husband instructed Mr Williams of Wood Marshall Williams to act for him in the proceedings against his former wife. He re-employed those solicitors, for a short period of time, in relation to these proceedings. In a letter from those solicitors to the wife’s solicitors dated 12 July 2007[11] (such letter was dictated in the husband’s presence and involved the assistance of Mr Graham Richardson S.C) the husband asserts, through his solicitors, that the Agreement does not comply with s 90G of the Act and invited the wife to concede that the Agreement is not binding and to enter into litigation or negotiation with regard to property proceedings under the general provision of the Act.
[11] Exhibit W2.
76.When the husband was first cross-examined in relation to the draft agreement he said he had limited recall. When shown the documents and pressed he was able to recall some parts, but as I have said, parts of that evidence seemed to be reconstruction.
77.As I said earlier in these reasons, the husband said he did not discuss the detail of this Agreement with Mr Samews. I do not accept his evidence in that regard. I am satisfied he received the advice over a period of time and was very aware of entering into the consequence of that Agreement. The reason the husband wanted the Agreement was to avoid the conflict that he had with his previous wife.
78.The husband complained that the wedding was arranged and that it would have been difficult to delay. It was a small wedding involving the parties, members of their families and perhaps another ten guests. They had a room booked at a hotel, which on the husband’s evidence, the date for the wedding could have been changed. I am satisfied the husband knew that each of the parties were receiving independent advice and the reasons for that advice.
79.In cross-examination the husband grudgingly acknowledged the wife had made some contributions and was entitled to some money, although his assessment of her value is modest, to say the least.
80.The husband asserted that he was not provided with legal advice from his then solicitor, Mr Samews. He did not raise this issue with the wife until January 2010. I do not believe this evidence by the husband. I am satisfied that it is recent invention. He gave no satisfactory explanation as to why there was a delay in providing this excuse.
81.There was some cross-examination of the husband in relation to the purchase of a property at W. The husband was cross-examined as to the use of the wife’s surname “[X]” in the trust document. This was used in terms of the wife’s purchase of the property at W as trustee. The husband provided a letter showing his instructions to Mr Samews. I accept that evidence.
82.The husband acknowledged in his letter to the wife of 22 May 2007 that he was bound by the Agreement. It was only after the husband obtained legal advice that he challenged the Agreement. Initially it was challenged on the basis that it did not comply with the legislation by virtue of the faulty certificates attached to them. The certificates arose out of the 2000 Amendments to the Family Law Act and did not reflect those required under the 2005 amendments to the Family Law Act.
83.The husband denied that his snoring was an issue between the parties. I do not accept his evidence in that regard. The husband complained of a lack of intimacy after the marriage and/or the change to its quality and/or quantity. I prefer the wife’s evidence on the issue.
84.In any event any change in the nature of intimacy between parties when they marry is not an indication of fraud, coercion or unconscionable conduct. It is indicative of normal human behaviour. The nature any of intimate relationship of couples will almost invariable change over the years of cohabitation. These parties were not in the ‘first blush’ of their relationship in 2005, they had commenced living together about eight year’s previously.
85.The husband produced in evidence a letter from the wife’s solicitors dated 26 February 2008 after the decision of the Full Court in Black v Black (supra) and before the 2010 amendments. The wife at that stage said she would agree to set aside the Agreement. She withdrew that concession with the passing of the 2010 amendments. It is, at the end of the day, an offer which in those circumstances is neither here nor there.
86.The husband was cross-examined in relation to documents he produced to the wife’s legal representatives. The husband asserted that his wife’s credit card was used exclusively by her. When shown an entry for a payment to a School in May 2007 the husband conceded that they were school fees for one of his children. He then altered his evidence and said that payments may have been made from that account but not many. His evidence had an element of reconstruction. His evidence was both unimpressive and unreliable in respect of that material.
87.I have treated the husband’s evidence with caution and for the reasons set out I conclude that it was, from time to time, fashioned to meet his perceived needs.
Mr W
88.Mr W is the de facto partner of Ms H who is in turn the husband’s sister. Mr W provided an affidavit which was filed in Court on 20 August 2010. Mr W first met the wife in England in 1999. He met her again on a number of occasions during trips he made to Australia and trips the wife made with the husband to England until Mr W and his partner moved to Australia in February 2007.
89.His evidence in many ways supported the fact that there was a continuing relationship between the husband and the wife prior to marriage and after the marriage.
90.Mr W gave evidence about a statement alleged to have been made by the wife in March 2007. It must be seen in the context of either being light-hearted or the parties’ relationship breaking down. It does not provide any evidence to support the equitable contentions of fraud made on the part of the husband.
91.Mr W gave evidence of discussions between himself and the wife and of events in May, June and August 2007.
92.Very little swings on this evidence. The husband and wife’s relationship was breaking down by that time. There is some element of reconstruction in terms of the dates by this witness, however his evidence is generally of a relationship that was failing and which in fact subsequently failed.
93.The evidence of Mr W in respect of what he observed in paragraph 19 of his affidavit is not evidence of any long term view, if it is accepted. I am not convinced that his evidence is reliable and it is not relevant to the wife’s state of mind in September 2005.
Ms H
94.The husband’s sister, Ms H, gave evidence in accordance with her affidavit filed 20 August 2010. She confirms that she was introduced to the wife in 1998 in “uncomplimentary” terms. This is evidence that the relationship had commenced and that the husband and wife were living together. Ms H saw the husband and wife together over a number of years which is consistent with a continuing relationship.
95.She says that the wife wanted the husband to marry her and expressed that view to Ms H. If true, it is not indicative of any fraudulent or coercive attempt, it is a desire of a party to a relationship to have that relationship recognised under the Marriage Act 1961, no more, no less. In fact, the parties did just that in October 2005.
96.Ms H gives evidence of a conversation she allegedly said she had with the wife on 28 September 2005. The statement asserted is inconsistent with the agreed facts at that time, that is, that the parties had reached an agreement, that the wife had signed her part of the Agreement and the husband was going in the next day to sign his part. The evidence of the husband was that the negotiations by that time had been completed. On balance, I prefer the evidence of the wife.
97.It must be seen that Ms H is a partisan witness and her evidence is coloured by her close relationship with her brother.
98.There was some evidence that the wife wanted to have children by the husband and expressed that desire to Ms H. It is hardly contentious.
99.There is some evidence that in June 2006 the wife asked the husband to provide a car due to some licence circumstances of the wife. That is hardly a contentious issue. I accept the evidence of Ms H that the relationship between the husband and wife appeared to have deteriorated in the period between June 2006 and January 2007.
Mr Samews
100.Mr Samews acted for the husband in respect of the Agreement and he gave oral evidence. He was required to attend court by way of subpoena. At all relevant times, Mr Samews practiced as a qualified legal practitioner in Sydney under the name of Samews & Co.
101.There was no issue raised as to his status as a practitioner. Accordingly, I am satisfied that at the time he witnessed the husband’s signature and signed the certificate he was a qualified legal practitioner within the State of New South Wales.
102.Mr Samews said that he had been unable to ascertain the whereabouts of his two files in respect of the husband. Mr Samews was unable to find his file in respect of the Agreement. He said he had some recollection that it was taken by the husband. I make no finding as to whether the file was taken by the husband or not.
103.Mr Samews witnessed the husband’s signature to the agreement and signed the attached certificate under the Act. He said he and the husband had had a number of discussions and meetings over a period of time. He said there were at least three meetings.
104.Mr Samews’s evidence was that he made hand-written notes but they were with the lost file. The legal work was entirely done by Mr Samews, although he had administrative help from a secretary.
105.Mr Samews’s recollection about the matter was reasonably good, he said he prepared the original draft then Mr Smith, the wife’s solicitor, suggested that he prepare another form. Mr Samews was comfortable with this and that document was prepared. Mr Samews said he and the husband had a meeting over that document and then eventually a final document was prepared. He was not sure if there were additional telephone calls.
106.Mr Samews gave evidence that he provided legal advice to the husband both generally and specifically. He advised the husband that he was wise entering into the Agreement and that there were advantages to him. Mr Samews said that he had told the husband he thought the amount was very high but that the husband could rely on the document and be successful in any litigation.
107.Mr Samews was given an affidavit by the husband’s previous solicitor, earlier this year. Mr Samews declined to swear that affidavit. The evidence of Mr Samews was that clause 23 had been amended in his hand-writing and that he had initialled that amendment on the right hand side. He said the number “4” at paragraph 25 of the Agreement looked like his hand writing.
108.Mr Samews’s evidence was clear and I am satisfied that he was endeavouring to tell the truth and be accurate in his evidence. I accept his evidence. I am satisfied that he provided the husband with advice in accordance with the certificate attached to the Agreement and in accordance with the recital contained in the Agreement.
109.It is not a matter for this Court to determine the adequacy of such advice but simply to be satisfied that such advice had been given. This finding by me is not to be taken as an affirmation of the advice or a criticism of the advice provided by Mr Samews.
Mr E
110.The husband relied upon an affidavit of Mr E filed 20 August 2010. Mr E’s evidence was, in essence, that he had known the parties for about five years (since 2005) and that he observed the wife at a tavern at about the time of her separation from the husband. He said the wife appeared drunk and said she was looking for another relationship (albeit he expressed this in much more colourful and descriptive terms).
111.Mr E said that he observed the wife walking home some time in early June 2007 and he provided her with a lift and that she told him she had taken money from the husband’s credit card because that was all the money she had.
112.Mr E’s evidence is information as to the wife’s state of mind in or about September 2005.
Mr Q
113.Mr Q gave evidence in accordance with his affidavit filed 19 March 2010. Mr Q has known the wife for almost twenty years and met the husband in 1998. This is supportive of the existence of a de facto relationship between the parties commencing at about that time.
114.Mr Q says that after the husband’s 50th birthday party at M the wife made some remarks about the husband’s wealth and him being attractive to other women because of his wealth.
115.Mr Q said that he had a long telephone conversation with the wife about four months after she had married the husband (presumably this would have been January or February 2006) when the wife said that if she and the husband ever separated she was not going to walk away “with nothing” or words to that effect.
116.Further, Mr Q claims that in October 2006 he had a chance meeting with the husband and wife at Randwick Racecourse and that he introduced the wife to a family lawyer and that the wife made comments about her relationship then. I note this was October 2006.
117.Mr Q sets out further conversations. He said that the wife has a tendency to say outrageous things or to try and shock people. It is his view that they may have been such words.
118.Mr Q also gave evidence that the wife was hoping to have a child to the husband and that she slept in a separate room because the husband snored.
119.I am not satisfied that his evidence is entirely reliable. If is has any value it establishes that the wife, from time to time, made provocative statements in endeavours to shock or surprise people.
Mrs N
120.Mrs N gave evidence in accordance with her affidavit filed 6 May 2010. Mrs N had known the husband for many years and met the wife in about 1998. She said she and her husband visited the parties in Sydney once or twice a year and the parties visited Mr and Mrs N in Victoria once or twice a year. She said she was good friends with the wife.
121.Mrs N said, at paragraph 6 of her affidavit, that she had a conversation with the wife the day before the wedding. In that conversation she asserted the wife said to her words to the effect that “the wedding will not go ahead if [the husband] does not agree to a pre-nup”. Mrs N went on to say that the wife was ambivalent in relation to what was happening. Mrs N was sure of the date because she said it was the day before the wedding.
122.If her evidence was correct in terms of time the time of her recollection of the conversation, her evidence must be defective as the parties had, by that time, signed the Agreement.
123.Mrs N recalled a conversation she had with the wife in paragraphs 12 and 14 of her affidavit.[12] Her evidence was that she took these comments as a joke.
[12] Filed 6 May 2010.
124.Mrs N’s evidence was provided primarily as a friend of the husband, it is subjective. Having regard to the nature of the evidence and the demeanour of the witness, I do not give it significant weight.
Mr N
125.Mr N gave evidence in accordance with his affidavit filed 23 August 2010 and sworn by him on 9 June 2010. Mr N lives in Victoria and has been a friend of the husband for about thirty three years. His evidence is not particularly helpful in the context of these proceedings. I give it little weight.
The wife’s mother
126.The wife’s mother gave evidence in accordance with her affidavit filed 9 August 2010.
127.The wife’s mother was somewhat vague in her evidence and she was easily confused by senior counsel for the husband in cross-examination.
128.I accept her evidence in terms of a relationship between the husband and the wife from 1998, her observations of the wife’s contributions from August 2004 through to the end of the marriage and in particular that which was set out in paragraph 7 of the wife’s mother’s affidavit.[13]
[13] Filed 9 August 2010.
129.There was fairly robust cross-examination of the wife’s mother in relation to her observations of the time the husband and wife spent together at the home at M and whether the parties spent more time together than was asserted by the husband or as asserted by the wife.
130.The wife’s mother was also cross-examined about the wife celebrating, by using the words “I did it” (allegedly), on her wedding day. The perception and assertion by the husband and his sister was that by saying “I did it” should be somehow related back to the Agreement. There are alternate explanations including excitement at being married.
131.Having regard to all of the evidence, I am satisfied that the comment, if made, was simply the exuberance of a bride on her wedding day.
132.The wife’s mother’s recollection of the parties’ times they lived together and the rooms in which her daughter slept at H is vague and was not of assistance to the Court.
Mr Y
133.Mr Y relied upon his affidavit filed 9 August 2010 and sworn by him on 6 August 2010. Mr Y was introduced to the wife by the husband in March 2006.
134.There was an issue about Mr Y being found at the parties’ property in April 2007. Mr Y was not cross-examined in relation to his evidence about meeting with the husband and another person who played poker at the husband’s home. Mr Y and the wife commenced a relationship later in 2007 and now live together.
135.I was somewhat perplexed at this evidence as it related to the parties’ behaviour at and around the time of separation. It is not evidence of any fraud or coercion as asserted by senior counsel for the husband in or about September 2005.
136.I accept the evidence of Mr Y as being reliable, albeit coloured by reason of his relationship with the wife.
Mr Smith
137.Mr Smith was a solicitor who was employed by the wife to represent her interests from the time before she entered into the Agreement until the time that the wife entered into the Agreement. Mr Smith provided evidence in accordance with his affidavit filed 19 September 2008. He was cross examined by senior counsel for the husband.
138.Mr Smith’s evidence was that in 2005 he had been practicing as a solicitor for about 20 years. In September 2005 he received instructions from the wife in respect of the Agreement. He set out in his affidavit details of what occurred as between himself and the wife during the course of that professional engagement.
(a)whether interest should be paid at all, if so
(b)from what date until when, then
(c)the rate of interest; and
(d)whether that rate should change at any time.
343.In this matter the husband wrote to the wife in April 2007 telling her the marriage was at an end and indicating that he was bound by the terms of the Agreement. The parties had discussions after that and the husband then wrote to the wife on 22 May 2007 telling her that she would be financially safe.
344.In June the wife’s solicitors wrote to the husband’s solicitors requesting the monies payable under the Agreement. On 13 July 2007[73] the husband, on the advice of a solicitor and senior counsel, wrote to the wife repudiating the Agreement and indicating that he was not bound by it. Subsequently the wife’s solicitor sent a letter to the husband in February 2008[74] saying she would not be pressing the Agreement because of the Full Court decision of Black v Black (supra).
[73] Exhibit W2.
[74] Exhibit H5.
345.I am satisfied that the husband was obliged to comply with the Agreement and ought to have paid the $3,250,000 to the wife within a reasonable period after separation. Having regard to the husband’s considered repudiation of the Agreement I am satisfied the appropriate commencement date for interest ought to be 13 July 2007. This would have given the husband time to arrange finance and conduct an orderly implementation of the terms of the Agreement.
346.The wife has not had the benefit of funds, to which I have determined she is entitled, from 13 July 2007 to date, with the exception of the $100,000 to which I alluded earlier. The husband has had access to those funds. The husband was advised that the Agreement was not binding as a consequence of the Full Court decision in Black v Black.The state of the law regarding financial agreements was uncertain between 13 July 2007 and 24 January 2008, bearing in mind my first instance decision in Black v Black (supra) and other differing first instance decisions at that time. From 24 January 2008 to the commencement of the 2010 amendments in February 2010 the law was clearer, subject to the question of equitable rectification raised by the wife.I have discussed elsewhere the effect of the 2010 amendments.
347.As to the rate of interest, the Full Court in Cross v Beaumont [2007] FamCA 123 discussed the question of interest prescribed by the Rules.[75] In this case the Full Court approved of the approach adopted by the Full Court in S v S (unreported judgment delivered 11 December 1991: Baker, Lindenmayer and Rourke JJ,) and JEL and DDF (No. 2) 2001 FLC 93-083 in that they reflected on the “penalty nature” of the interest. In Cross v Beaumont, the Full Court said:-
46.In [S and S] (supra) the trial Judge ordered that the husband pay interest on the balance of the outstanding principal due to the wife. The trial Judge, in his reasons, accepted submissions made on behalf of the husband that he would in the long term need to dispose of real estate to pay the sum due to the wife, and that he did not have any long term capacity to service a substantial loan “for the purpose of satisfying the wife’s award”. Consequently the trial Judge ordered the payments to be made to the wife should be by way of instalments over a period of 18 months. At the time of the hearing the interest rate prescribed under the then Regulations was 18 per cent per annum. The Full Court found that regardless of whether payments were made promptly, as and when they fell due, interest amounting to $60,750.00 would have accrued by final payment. It was accepted by the Full Court that the provision for interest on the balance due amounted to an unwarranted penalty, but that interest should be payable in the event of default of the trial Judge’s orders.
47.In JEL v DDF (No 2) (supra) the Full Court considered whether interest at the rate prescribed in the rules, or interest at market rates should be applied to a sum the wife was required to repay to the husband after a successful appeal. The Full Court rejected the husband’s submission that interest should run at the prescribed rate and referred to such rate as “what can only be described as a penalty rate”.
48.In this case the trial Judge recorded the husband’s assertion that he “could not, without the co-operation of his mother and siblings – unlikely to be forthcoming in these circumstances – access his interest for the purposes of paying out the wife”. The trial Judge, as we have already recorded, after noting the husband could pay $31,000.00 by 1 June 2006 said “[a]s to the balance of $62,860, however, I can not set a date for payment of that amount that is earlier than the end of the life tenancy, or upon the husband having earlier access to his interest in the estate and whilst the husband and his family may take steps to raise the money earlier, I can not compel them to do so”.
[75] Family Court Rules 2004 (Cth).
348.In Cross v Beaumont (supra) the money payable by the husband was in relation to money becoming available to him. In that case the money could not be paid without the co-operation of the husband’s mother and siblings and this was unlikely to be forthcoming and the Full Court then re-exercised the discretion of the first instance judge and reduced the interest from 10.75 per cent to a commercial 90 day bank billed rate of 6.3667 per cent.
349.This case, however, is somewhat different. The husband committed himself to paying that amount of money to the wife. He committed himself in September 2005, after considering the question of a financial agreement for about six months.
350.In April 2007, as the parties’ marriage deteriorated, the husband acknowledged to the wife her entitlement to the monies under the Agreement. The husband assured the wife on 22 May 2007 that she would be financially comfortable. Some five to six weeks later the husband repudiated the Agreement.
351.There is no reason why the husband ought not to pay interest on that Agreement on the basis that it was a debt outstanding from that time and considering all the factors, I will adopt the interest set out under the Family Law Rules 2004 (Cth).
352.The parties to these proceedings have been caught up in a period of uncertainty following the development of the jurisprudence and creation of new statute laws since 2000.
353.Prior to December 2000 the law regarding financial agreements was well settled. Agreements under s 87 of the Act were binding provided the Court approved the agreement. Agreements under s 86 of the Act were initially problematic however the Court adopted jurisprudence to preserve its jurisdiction and it held that the only way the Court’s property jurisdiction could be ousted is by court order or a s 87 agreement.
354.The Australian Parliament amended the law as and from 27 December 2000 which enabled parties to enter into binding agreements. In Jv J[76] the Court adopted a strict approach interpreting the law regarding financial agreements. I took a different approach in Black v Black (supra) (15 September 2006).
[76] [2006] FamCA 422 Collier J.
355.An appeal from that decision was determined by the Full Court in 2008. The Full Court adopted a strict interpretation approach in that appeal[77]. The Parliament took an interest in this area of the law and amended this provision again with the Federal Justice System Amendment (Efficiency Measures) Act (1) 2009 which commenced 4 January 2010.
[77] Black v Black [2008] FLC 93-357.
356.The impact on these parties has been profound. The husband initially had a strong argument to set the Agreement aside relying upon the jurisprudence as set out in the Full Court’s decision of Black v Black (supra). However, with the 2010 amendment including some retrospective provisions contained in it, the Agreement is binding on the husband.
357.The overall effect of that is that the parties have become polarised by the dispute and have committed significant legal costs in relation to their relative positions.
358.The jurisprudence contained in the Full Court decision of Black v Black and subsequent legislative policy changes must have a bearing in relation to any costs applications of either party, should they be made in these proceedings.
359.Accordingly, I propose to impose a commercial rate of interest from 13 July 2007 to the date the amendment Act commenced in 2010. From that time it should have been clear to the husband that the basis of his primary contentions about the agreement had evaporated. I add that I did not accept his evidence in respect of the claim under s 90G of the Act.
360.In these proceedings there were a significant number of complex legal arguments and I was greatly assisted by the thoughtful and thorough written and oral submissions provided by senior counsel for each of the parties and for the Attorney-General. They devoted considerable work and effort to those submissions and that work is acknowledged
I certify that the preceding three hundred and sixty (360) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 31 January 2011.
Associate:
Date: 31 January 2011
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