Warner and Cummings
[2017] FCCA 432
•10 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WARNER & CUMMINGS | [2017] FCCA 432 |
| Catchwords: FAMILY LAW – Property application to set aside a binding financial agreement (“BFA”) – novel but legally and factually artificial argument that the recitals to the BFA should not be considered in construing the “operative” parts of the BFA as well as that the recitals cannot be considered in relation to compliance with the requirements of s.90UJ and s.90UM of the Family Law Act1975 (“the Act”) – actions of the Applicant found to be opportunistic in bringing the Application and did so only after the proceeds of sale of his property were not realised – challenge to evidence of Applicant’s former solicitor regarding the nature, quality and content of advice given to Applicant prior to the signing of the BFA – principles of construction considered in light of recent High Court decisions – failure by Applicant to refer to any relevant Full Court authority regarding “advice” given in conformity with Part VIIIAB requirements and issuing a “certificate” under those same requirements. |
| Legislation: Family Law Act 1975 (Cth), ss.90G, 90K, 90UD, 90UJ(1) & (1A)(b) & (c), 90UM |
| Cases cited: Byrnes v Kendle (2011) 243 CLR 253 Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 333 ALR 384 [Justice] R. McDougall, “Construction of Contracts: the High Court’s approach,” (2016) 41 Australian Bar Review 103-119 Shorter Oxford English Dictionary (Fifth Edition, 2003) |
| Applicant: | MR WARNER |
| Respondent: | MS CUMMINGS |
| File Number: | CAC 1778 of 2015 |
| Judgment of: | Judge Neville |
| Hearing date: | 8 June 2016 |
| Date of Last Submission: | 6 July 2016 |
| Delivered at: | Canberra |
| Delivered on: | 10 March 2017 |
REPRESENTATION
| Solicitor/Advocate for the Applicant: | Mr A Warren |
| Solicitors for the Applicant: | Andrew Warren & Associates, Bega |
| Counsel for the Respondent: | Ms A Tonkin |
| Solicitors for the Respondent: | Robinson + McGuinness, Canberra |
THE COURT DECLARES THAT
The Financial Agreement entered into by the parties, dated 15th July 2013 (“the Agreement”), is a Part VIIIAB Financial Agreement pursuant to the Family Law Act1975 (Cth).
The Agreement is binding on the parties pursuant to s.90UJ(1B) of the Family Law Act 1975 (Cth).
THE COURT ORDERS THAT
Within 28 days of the date of the Orders of this Court, the Applicant pay the Respondent the sum of $121,848.25 together with interest at the rate prescribed by the Family Law Rules from 17th May 2015.
The Application, filed by the de facto Husband on 12th November 2015, be dismissed.
Absent any Application within 14 days from the date of these Orders, the Applicant is to pay the Respondent’s costs, either as agreed or taxed.
IT IS NOTED that publication of this judgment under the pseudonym Warner & Cummings is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 1778 of 2015
| MR WARNER |
Applicant
And
| MS CUMMINGS |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns the validity and enforceability of a binding financial Agreement (“the Agreement” or “BFA”) which the parties entered into on 15th July 2013. A copy of that Agreement, executed by the parties, is at (among other places) pp.40 – 47 of the Applicant’s affidavit, filed 12th November 2015.
The Applicant seeks a declaration that the Agreement is not binding, pursuant to s.90UJ of the Family Law Act 1975 (“the Act”), or in the alternative, pursuant to s.90UM(5), an Order to set it aside.
The Respondent seeks, among other things, a declaration that the Agreement is binding and that its terms be enforced.[1]
[1] In the course of these reasons, solely for ease of reference, from time to time, the parties will be referred to as “Husband” and “Wife”, noting that this does not reflect the legal (or other) reality of their relationship.
Background
The parties were in a de facto relationship between February 2007 and March 2012 (the Agreement records in Recital G that the end date was in fact June 2012). They had no children together, but each of them has adult children from earlier relationships.
The parties lived together at the Husband’s property called “Property E”, which is not too far from (omitted) in southern New South Wales.
It is not disputed that in early January 2013 there was a large fire on the property which devastated, among other things, stock, plant and fencing.
On 15th July 2013, following lengthy discussions between themselves, and later involving lawyers, the parties formalised the Agreement which, summarily, outlined that the Husband would pay the Wife an amount that was recorded in the BFA as a sum loaned by the Wife to the Husband’s pastoral company during the course of the relationship, and otherwise that each party would retain their own property and superannuation, and that any jointly owned property would be split 50/50
The Applicant now seeks Orders that (a) the Agreement is not binding and or (b) the Agreement should be set aside.
Couched in more colloquial terms, in my view, this matter is about the Applicant “having his cake and eating it too.” This is to say that the Applicant was seemingly content with the terms of the Agreement struck with his former partner, the Respondent, at the time of signing the Agreement in July 2013. It also seems that he was [still] not unhappy with the Agreement in mid-2014.
Indeed, the Applicant, Mr Warner
(a)raised no question about re-visiting the Agreement until mid-2014;
(b)in March 2015, confirmed by email to his then solicitors that Mr “Moore … initially checked the Agreement prior to signing it, and has since checked the Agreement for me again to see if there are any loopholes and apparently it is pretty watertight” but that he still wanted to re-visit the Agreement. Equally he made no complaint about the advice he received in relation to the Agreement until the current Application was filed in November 2015;[2]
(c)raised his discontent, on his own evidence, [only] when the primary asset (a property known as Property E) did not sell for the amount that he anticipated and expected. Likewise, his expectations regarding the amount recovered from his insurance was not as much as he expected. Only when these expectations were not realised did he seek to re-visit the terms of the Agreement.
[2] See the email from Mr Warner to Mr Freer at KJB Law, dated 20th March 2015, at B44 in Exhibit C.
By way of observation only, it would seem (especially on the Husband’s evidence noted later in these reasons) that the Husband is now not in as comfortable a financial position as he would have expected (or hoped) to be, and or that he simply has decided he does not want to honour the Agreement, and therefore he has sought the Court’s assistance to get out of his Agreement with the Wife.
Although he said that he was stressed at the time of signing the Agreement in July 2013 because of a large fire that swept through the property, and therefore (he said) he should not have signed it, he put no medical or other independent evidence before the Court to support his contention about his “stress” at the time of signing it.
Formally, the Respondent relevantly seeks declarations as to the validity and enforceability of the Agreement, as well as [consequential] Orders for payment of the specified sum set out in that Agreement. The Respondent also seeks an Order for costs. In later written submissions, the Respondent indicated that an Application for indemnity costs would be made.
The parties commenced their de facto relationship in approximately early or mid-2007, and separated in March or June 2012. The Applicant was born in 1949; the Respondent was born in 1952. These dates make the parties now 68 and 65 years respectively.
Because of the nature of the Application, only two witnesses were cross examined: the Applicant’s former solicitor and the Applicant. They were cross examined in that order.
Before considering the evidence from cross examination and otherwise in detail, there is one matter of evidence, albeit in a number of parts, which should be noted at the outset. In my view, these aspects of the evidence were (at trial) and remain extremely significant, especially in relation to the credit of the Applicant and his evidence.
The Applicant owned a rural property called “Property E.” He had it at the commencement of the relationship with Ms Cummings. At that time, he deposed that it was worth some $1.25 million. There was a mortgage (also at that time) to the (omitted) Bank of approximately $430,000.
In his trial affidavit, filed 12th November 2015, the Applicant also deposed (pars. 26 ff) that early in the relationship this farming property “ran into financial trouble.” The Applicant then set out, somewhat Job-like, the causes of those financial problems, such as drought, stolen stock, loss of stock through poisoning, and a major bush fire on the property in January 2013 which resulted in the farm being burnt out. Only a limited amount of money (e.g. from insurance approximately $280,000, even though in his affidavit he had earlier deposed to receiving some $380,000 from insurance)[3]was recouped through insurance and the sale of the property. These and other matters that outline the Applicant’s financial plight, especially as a result of the fire and its aftermath, are recounted at pars.41 – 51 and 77 – 82 of his trial affidavit. In referring to these paragraphs I do so only for the purposes background because they were formally ruled out, by consent (they were not formally pressed by the Applicant after objection from the Respondent), early in the trial.[4]
[3] Among other places, see Transcript (8th June 2016) p.101. Hereafter “T” followed by the page number.
[4] See T 12.
So, the first matter to note is that in the Respondent’s “tender bundle” of documents (Exhibit C), at A19, there is a copy of an email from the Applicant to his then solicitor, dated 20th June 2014. Relevantly, it stated (emphasis added):
I am not surprised that the Agreement is difficult to overturn and there doesn’t appear to be any relevant “out” from what you have quoted. Nevertheless, I would be surprised, given my circumstances if the judiciary would not consider favourably some form of leniency based on our claim that at the time I signed the Agreement, my mental fitness and therefore health was seriously impaired by stress following major personal trauma caused by the massive bushfire and various difficulties that occurred subsequent to the fire. I signed this Agreement simply to get rid of it.
You are probably correct that Ms Cummings will likely be less than amenable to changing the Agreement but I will try to persuade her anyway. We still talk to each other.
I am not trying to negate completely the Agreement…
I note again, and emphasis, that the Applicant never provided any medical or independent evidence regarding any alleged (mental or psychological) incapacity. Significantly, nor was this a reason formally argued or submitted as a ground for setting aside the Agreement.
There was an earlier email, dated 10th June 2014 (at B30 of Exhibit C), to similar effect, namely that the Applicant wanted to re-visit the Agreement. In that email, the basis for re-visiting it was essentially because, according to the Applicant, the parties had a particular expectation regarding what would be obtained from the sale of the property Property E. Clearly, when that was not realised, the Applicant decided to seek to “re-visit” the Agreement.
Consistent with these earlier emails, following a series of questions in relation to claims that he was not properly advised by his then lawyer in relation to the Agreement, towards the end of his cross-examination the following brief exchange took place:[5]
HIS HONOUR: … Can I ask you this? If there had not been a fire and if the property had sold in accordance with your expectations would you have any difficulty with this Agreement?‑‑‑No.
[5] T 100.
In my view, this concession/acknowledgement (and the earlier emails to which I have referred) undermined the whole raison d’être of his Application in both of its aspects, namely (i) non-conformity with the terms of s.90UD/90UJ (“the recitals” argument) and or (ii) that the Agreement should be set aside by operation of the terms of s.90UM(5) of the Act (“the advice” argument).
Among other things, these three related aspects of the Applicant’s evidence clearly show that (a) the Application was an ex post facto procedure to re-visit the Agreement that had been entered into in July 2013, but which would not have occurred if his financial expectations had not been thwarted by natural and other events, and (conversely) (b) the Application was predicated upon a change in the Applicant’s financial circumstances because his expectation(s) of the amount that he would recoup from either or both insurance and the sale of Property E were not realised. In my view also, the emails from and the oral evidence of the Applicant cast extremely significant doubt about (i) the veracity and (ii) the credibility of his evidence. His Application, in the light of this evidence together with his oral evidence at trial, suggests that his word and his actions are either unreliable and or that he is quite opportunistic: when circumstances change, he will set his sail to change course in a way to ensure that he, and he alone, is best served regardless of what his originally agreed, signed and documented plans were.
Indeed, on this view, notwithstanding the express terms of the Agreement, and the very considerable discussions between the parties regarding [at least] the Applicant’s financial position but some consideration too of the Respondent’s financial position (on the Applicant’s own evidence), expediency dictated by changing circumstances, rather than honouring an Agreement, was the guiding “principle.”
Further, as recorded later in these reasons, much of the contest came down to the evidence of Mr Warner and that of his former solicitor, Mr Moore. For reasons explained below, I strongly prefer the evidence of Mr Moore to that of Mr Warner where-ever there is any inconsistency between them. This is particularly the case where, on the one hand, Mr Warner’s evidence was that he was never advised (or in the alternative, properly advised) in relation to the Agreement. Mr Moore said that Mr Warner was properly advised in relation to it and his file note, dated 15th July 2013 and his time costing records, confirm this evidence.[6] An earlier and very grave contention raised by the Applicant’s lawyer in the course of the hearing that this file note was either fabricated or prepared only at a very much more recent time prior to the hearing was ultimately not pressed.[7] As a matter of evidence, and in the light of Full Court authority referred to later in these reasons (which unfortunately was not addressed by the Applicant), in my view the Applicant’s [so-called] “lack of advice” argument has almost no weight because the evidence of both the file note of the Applicant’s then solicitor, as well as that solicitor’s time-costing note must, prima facie, be accepted.
[6] A copy of the file note of 15th July 2013 is at A10-11 of Exhibit C, while the time-costing record of Mr Moore is at A12-13 of the same Exhibit.
[7] T 13 & 82.
While the matter could be disposed of, in my view, on the basis of the concession by the Applicant during the trial to which I have just referred, and the contents of the Applicant’s emails also referred to, for the following further reasons, the Application must be dismissed and the declarations and Orders sought by the Respondent should be made.
Absent any Application in 14 days from the date of this judgment and Orders, there will be an Order for costs in the Respondent’s favour, either as agreed or taxed.
Orders sought by the Applicant de facto Husband
The Applicant’s Outline of Submissions, filed 3rd June 2016, set out his Orders sought as follows:
1) The applicant de facto spouse seeks a declaration that the financial Agreement is not binding on the applicant under s.90UJ of the Family Law Act 1975 (Cwth).
2) In the alternative, the applicant de facto spouse seeks an order that the financial Agreement be set aside pursuant to section 90 UM(5) of the Family Law Act 1975.
The reasoning behind the declaration sought, summarily stated, is that there was not strict compliance with the requirements of s.90UD of the Act. This is so, it was contended, and notwithstanding that the recitals to the July 2013 Agreement relevantly refer to that section of the Act, because (a) the “recitals” are not “operative” provisions of the Agreement, and (b) there is no reference in the covenants or operative section of the Agreement to s.90UD, or to the Agreement being clearly stated to be made pursuant to Part VIIIAB and that it is a “financial agreement” under that section, and/or (c) there was no expressed intention of the parties relevantly to oust the jurisdiction of the Court and that the Agreement was intended to record that the parties wished to “arrange their property affairs.”
Indeed, the Husband’s own evidence that he would have honoured (or not challenged) the Agreement but for his unfortunate financial circumstances confirms and substantiates his intention that the Agreement was entered into plainly to finalise the parties’ financial relationship and was, in fact and in all relevant respects, a binding [financial] agreement.
It was further contended that reference in the recitals to the Agreement are insufficient to bring it within the requisite terms of s.90UD, and that according to principles concerning the interpretation of contracts (e.g. as set out in Codelfa Construction Pty Ltd v State Rail Authority NSW)[8], it is impermissible to have regard to the recitals to the Agreement in order to seek compliance with s.90UD.
[8] Codelfa Construction Pty Ltd v State Rail Authority NSW (1982) 149 CLR 337 (“Codelfa”).
For the reasons that follow, all of these contentions should be rejected. As well, in the Applicant’s principal submissions (filed 3rd June 2016, par.2(j), p.9) he acknowledged that: “In the absence of the requisite advice being given, the agreement is not binding unless the Court finds that it would be unjust and inequitable for the Agreement not to be binding to s.90UJ (1A)(c).”
In addition to rejecting all of the arguments advanced by the Applicant, I accept this last submission. Whatever else might be said, in my view, for the reasons already given and those set out below, it would be plainly and utterly unjust and inequitable for the Agreement not to be binding. The terms of s.90UJ(1A)(c) must apply, and plainly so, to the facts and circumstances of this Agreement. It is therefore binding on both parties. In my view, given that the parties had discussed over a not insignificant period of time and agreed upon what was later reduced to writing in the Agreement, it would be unconscionable for the Agreement now not to be honoured.
Orders sought by the Respondent de facto Wife
The Respondent’s Outline of Submissions, filed 7th June 2016, set out her Orders sought as follows:
3. The respondent seeks on order dismissing the applications and the following further orders:
(a) A declaration that the financial Agreement entered into by the parties on 15th July 2013 (“the Agreement”) is a Part VIIIAB financial Agreement pursuant to the Family Law Act 1975 (Cth);
(b) A declaration that the Agreement is binding on the parties pursuant to section 90UJ (1B) of the Family Law Act 1975 (Cth);
(c) Within 14 days of the date of the Order, the Applicant pay the Respondent the amount of $121,848.25 together with interest at the rate prescribed by the Family Law Rules from 17th May 2015;
(d) The Applicant pay the Respondent’s costs of and incidental to the applications.
The Applicant’s Evidence
I should note at the outset that at the commencement of the hearing, in the light of the Respondent’s objections to specified parts of the Applicant’s trial affidavit, the solicitor for Mr Warner stated that pars.16 – 51 of his client’s trial affidavit were not pressed.[9] Likewise it was confirmed that pars.77 – 83 were also not pressed.[10]
[9] The Applicant gave evidence after his former solicitor, Mr Moore, was cross examined.
[10] T 12.
The Applicant confirmed that his former solicitor (Mr Moore) advised him in relation to an earlier binding financial agreement involving an earlier partner (Ms D), which Agreement is dated 1st May 2008 (C59 of Exhibit C). He also confirmed that he had no complaint in relation to Mr Moore’s advice regarding that agreement.[11]
[11] T 85.
This earlier Agreement, together with correspondence relating to it, is found at C49 – C64 of Exhibit C. I do not understand there to have been any challenge by the Applicant to the Recitals to that 2008 Agreement, which only makes his challenge to the Recitals to the Agreement in the current matter, in my view, even more problematic.
In relation to the Agreement that is the subject of the current proceeding, a significant range of questions were put to Mr Warner regarding (a) his discussions in April and July 2013 with Mr Moore in relation to it including whether he could have some [extra] time to consider it before signing (Mr Moore advised that there was no pressure or urgency to sign it and that the Applicant could take the extra time he needed), (b) discussions with Ms Cummings prior to and after April 2013 (the time of the fire to the property), (c) his receipt of a draft binding financial agreement from the Respondent’s then solicitors.[12]
[12] At par.52 of the Applicant’s trial affidavit, he deposed to receiving on 21st February 2013 or thereabouts a letter from Ms Cummings’s then solicitors enclosing a draft BFA.
Mr Warner said that he could not recall if he and the Respondent had spoken about the draft Agreement prior to receiving a copy of it from Ms Cummings’s former solicitors. He accepted that it was more than conceivable, or at least a reasonable inference that he would have discussed it with the Respondent.[13] However, with much of his evidence, he said that the devastation of the fire had left him with no clear memory of many things.[14]
[13] T 87 – 88.
[14] T 88.
At pp.25 – 27 of Mr Warner’s trial affidavit (Part of Annexure A) there is a document headed “Property E Pastoral Co … Account Transactions [Accrual] 14/7/2008 to 30/6/2012”. At the conclusion of that document (p.27 of the affidavit) there is a notation in the following terms:[15]
Total Amount of Loan from Ms Cummings to Property E for the Period 14 July 2008 to 30 June 2013 - $121,848.25.
[15] This schedule is in fact Annexure B to the Agreement. It is referred to in Recital K to the Agreement.
It is this figure ($121,848.25) that is set out in the Agreement that is agreed to be owed, and to be paid, to the Respondent. When it was put to the Applicant that he knew the contents of the draft Agreement and that it contained this sum, Mr Warner said that he did not know the contents of the draft Agreement when he gave it to Mr Moore to seek advice on it. He said further that he did not think that he was in a position to understand a legal document at that time.[16]
[16] T 88 – 89.
I pause here simply to comment that it may well be a reasonable proposition for someone to say that he or she did not understand a document that makes reference to certain parts of and provisions in the Family Law Act 1975. At a stretch, this might be almost a tenable proposition for a person who has previously entered such an Agreement under the Act regarding a financial agreement pertaining to an earlier relationship, which the Applicant did in May 2008.
However, it seems to me that whatever the difficult circumstances a person may find themselves in, it is quite implausible not to grasp and to have a basic understanding that two people, over a period of time, have agreed (a) to resolve the financial aspects of their now defunct relationship, and (b) as part of that agreement the same parties have agreed for one of them to pay the other a specific sum of money. This is precisely what had been discussed between the parties and their respective lawyers here for a not insignificant period of time. The detail, technicalities and vagaries of Part VIIIAB of the Act relate, primarily, to the formalities of the basal agreement reached between parties.
Mr Warner later confirmed that the draft Agreement he handed to Mr Moore on which he sought advice clearly contained reference to Ms Cummings seeking to have Mr Warner pay her the sum of $121,848.25.[17]
[17] T 89.
He said, by way of qualification, that he had agreed in principle to pay Ms Cummings a sum of money but he could not recall reference to a specific figure. He said that until he got the draft agreement he did not know the specific sum sought to be paid. Respectfully, for someone as astute as he clearly is, in my view it is inconceivable that he did not know the amount in issue and discussed by the parties to be paid, one to the other. The following exchange is illuminating (emphasis added):[18]
So when you provided the document to Mr Moore you instructed him that there was an in-principle agreement between you and Ms Cummings about the repayment of moneys; is that right?‑‑‑Yes.
And the figure at clause 3, did you turn your mind to that precise figure?‑‑‑I can’t recall. But I assume so.
Yes. Thank you. And if you have a look at Mr Moore’s letter to you which is at W1 at page 2, that being the email to you on 4 April 2013, you confirm in your affidavit that you received that email from Mr Moore?‑‑‑Yes.
And he had apparently had a discussion with you – have a look at that first paragraph – that the relationship had come to an end and you had suffered a fire on your property. And there was something about throwing – he made some joking remark:
Throw in the death of a favourite dog and, fair dinkum, I reckon there’s a country song in there somewhere.
[18] T 90.
He made that flippant remark?‑‑‑I do remember that, yes.
But that was quite sympathetic, because you and Mr Moore went back a long way. Isn’t that right?‑‑‑That’s correct.
He then gives you the advice he sets out in this particular document and you don’t cavil with that advice, do you? You’ve received that advice and read it?‑‑‑Well, even if I had, I couldn’t answer it on email, because I didn’t have it.
Respectfully, this exchange was quite typical of the Applicant’s answers to questions that warranted either a “yes” or “no” response. In my view, the Applicant’s answers to questions such as this one were more an exercise in dissembling. It was easier to avoid a direct answer than to agree with or admit to the detail of the agreement that had been discussed at length with the Respondent.
In answer to questions about correspondence with Mr Moore’s firm between April and May 2013, Mr Warner (a) confirmed that he had a copy of the draft Agreement in his possession and (b) because of discussions with the (omitted) Bank at the time, he did not wish to disclose to the Bank (or to the Ombudsman to whom he had complained about the Bank) that he had agreed to pay Ms Cummings the sum of $121,848.25. He referred to this amount as an “encumbrance.”[19] In my view, this again was an acknowledgement by the Applicant of the amount that had been agreed he would pay to the Respondent, but which, in this instance, he had chosen for tactical and other reasons, not to disclose to the (omitted) Bank at that time.
[19] T 91.
Mr Warner further confirmed that he had received an email from Mr Moore which confirmed that he was not under any pressure to sign the Agreement; he should, advised Mr Moore, “sort out” his banking affairs, and then sign the Agreement.[20] Mr Warner confirmed that the response from Mr Moore “was the response I was waiting for and sought.”[21]
[20] A copy of this email, from Mr Moore to Mr Warner dated 9th May 2013, is at p.10 of Exhibit W 1.
[21] T 92.
At W1, p.5, there are copies of correspondence between Mr Moore and the Respondent’s then solicitors, dated 11th April 2013, which was forwarded to Mr Warner. This correspondence related to a suggested amendment from Mr Moore to the other side’s solicitors in relation to the Agreement.
Having said that he did not think that he and Ms Cummings “really knew what effect the separation would have on us initially, and I don’t think we ever actually discussed it at length at all”, in answer to questions from the Bench, there was the following further exchange (emphasis added):[22]
But in terms, though, of what this agreement says on its face, it’s pretty clear, isn’t it, that there’s a very simple and straightforward agreement where you would pay her this sum 128 – sorry, $121,848, end of story. And everyone basically would keep whatever else each other – each of you had?‑‑‑I believe that’s the arrangement that we made by the time it was signed, yes.
[22] T 94. There are similar and significant related comments at T 98 & 99.
Then, having heard Mr Moore’s earlier evidence at trial, Mr Warner said that Mr Moore was not telling the truth in his evidence, including in relation to the advice which Mr Moore gave to Mr Warner on 15th July 2013 to which the file note of that date attests. In fact, Mr Warner deposed (his trial affidavit, par.71) that the only “advice” given by Mr Moore on 15th July 2013 was that the agreement was favourable to him and that he should sign it.[23]
[23] T 95 & 96.
Further, Mr Warner said that because of the trauma he suffered following the fire to his property he knew by the end of February in 2013 that he “should not touch this document [the Agreement].” That said, he confirmed that he was getting better by the time he saw Mr Moore in mid-July 2013.[24]
[24] T 96.
He said that on 15th July 2013 he was asked simply to sign each page; he said he scan-read each page but did not read each page thoroughly or “word for word.” He said: “I cannot to this day understand how I signed this document.”[25]
[25] T 97 & 98.
In relation to the Agreement generally (including the recitals to it) Mr Warner said (emphasis added):[26]
[26] T 98. I should note here that not only did the parties sign the Agreement, importantly they also signed or initialled the Recitals to it.
HIS HONOUR: So when you scan-read this agreement that included scan-reading the recitals. Correct?‑‑‑I’m sorry, your Honour?
Which is on page 40?‑‑‑Yes. I mean, that’s basically what I’ve done. I’ve just – before I’ve signed each page I have just quickly scan-read it to make sure it was a document that I was familiar with, but I haven’t gone through it in detail letter by letter, word by word ‑ ‑ ‑
But the – but the substance, though, of the agreement accords, or accorded at the time – pardon me – with the draft agreement that you had had for a significant period of time?‑‑‑Yes.
Correct?‑‑‑Yes.
And therefore at the very least there was nothing in your – even in your scan-reading that set off any sort of alarm bells that caused you not to sign?‑‑‑We had ‑ ‑ ‑
Sorry, could I have a yes or no to that?‑‑‑Yes. We had made amendments and it was brought to my attention that the amendments had been done as discussed.
Mr Warner confirmed that none of the proposed amendments to the Agreement related to or involved the Recitals to it.[27]
[27] T 99.
The Applicant said that, in his view, his email to Mr Moore (dated 20th June 2014) in response to Mr Moore’s advice to him about the difficulty in seeking to “overturn” the Agreement confirmed that he recognised that he should not have signed the Agreement because he was suffering from “stress.” He went on:[28]
It was my mistaken belief that the judiciary would give me an out to this agreement because of changed circumstances. I was absolutely gobsmacked when I learnt that the judiciary, in fact, don’t.
[28] T 99.
He further confirmed that, prior to 20th June 2014, he had not raised any complaint about the legal advice from Mr Moore.[29] And in answer to similar questions about seeking advice from Mr Moore regarding ways of “overturning” or challenging the Agreement, Mr Warner confirmed that he wrote to Mr Moore’s firm by email dated 10th June 2014 (B30 of Exhibit C) in which he said, among other things (emphasis added):[30]
… I want to revisit that agreement. Depending on the outcome of the upcoming auction I want KJB Law to be prepared to consider options to challenge at least 50 per cent of the figure that Ms Cummings’s seeking. I do not question her right to get at least 50 per cent, but she is asking for the return of 100 per cent of her money she put into Property E in the period we were together…
[29] T 99 – 100.
[30] See also T 100.
Mr Warner confirmed again that had he received the amount he expected from the auction of Property E he would not now be “complaining.”[31]
[31] T 100 & 101.
He refuted that he had received appropriate advice from Mr Moore regarding his “rights” under the Agreement, as well as in relation to the advantages and disadvantages of entering into it, and finally, that he had advised Mr Moore that his assets were worth about $1 million and that the Agreement was in fact advantageous to him.[32]
[32] T 101.
After having “totally refuted” the claim about the worth of his property being advised to Mr Moore of about “a million dollars”, in re-examination there was the following completely contradictory exchange which confirmed that he had advised Mr Moore that both parties knew well that the property was worth between $1.25 million, and up to $1.6 million on a “walk-in and walk-out” basis.[33]
[33] T 102.
In my view, the inconsistency in his evidence is patent. I have the greatest difficulty in seeing how Mr Warner could maintain, on the one hand, that he did not confirm to Mr Moore that he had assets worth “about $1 million”, and on the other hand, almost immediately confirm (in re-examination) that he advised Mr Moore that the property was in fact worth between $1.25 million and $1.6 million on the basis indicated, and that his financial situation (perhaps only in relation to the property but likely other related matters such as stock and equipment – especially given a value on a “walk-in and walk-out basis”) was the subject of discussions with the Respondent “at length”, all of which he conveyed to Mr Moore. The exchange was as follows (emphasis added):[34]
MR WARNER: ... The last questions that were asked about – it was suggested to you that you told Mr Moore that the assets were worth $1 million and as far as you were concerned you thought it was advantageous for you to enter into the agreement. You said that you totally refuted that and you wanted to comment on that. What were you going to say?‑‑‑It was my understanding at the time we were talking about a draft for this agreement that the property was worth between 1.25 million with – up to 1.6 million walk-in and walk-out.
HIS HONOUR: So when you say that it was our understanding, who was the our?‑‑‑Based on two valuations ‑ ‑ ‑
No, no. Who – who is – who is the us?‑‑‑Well, I’m – I’m a trained valuer for a start.
No, but you said it was our understanding. Who is the – who were you talking about?‑‑‑I’m sorry. My side ‑ ‑ ‑
Just you?‑‑‑My side. My family. Everybody. It was also Ms Cummings’s understanding. I mean, we had discussed this at length. She was my financial manager. She had a very good – a very good knowledge of what the property was worth.
And you communicated this information to Mr Moore?‑‑‑I did, yes.
[34] T 102.
This evidence of the Applicant, elicited in re-examination from his own lawyer, clearly acknowledges the detailed knowledge that both parties had of each other’s’ financial position. In the light of the Applicant’s own evidence, the claimed ignorance and or lack of advice regarding the “contributions” by each party to the relationship, and equally about the assets of each party, in my view is untenable in the light of the Applicant’s evidence. Equally untenable is the claim that he did not apprise Mr Moore of his financial situation, whose advice must therefore be taken to have been given (evidenced by his file note – on which see later in these reasons) in the light of that knowledge. The totality of the evidence leads inexorably to this conclusion.
Further to this, the Applicant, as he confirmed, is a “trained valuer”. He knows the value of property, not least his own. He had discussed, on his own evidence, the value of the property and his financial position with the Respondent, and conveyed all this information to his then solicitor. Given his training and experience, he is not a neophyte in the world of assessing the value of property and doubtless stock and appurtenances, or (because of his earlier experience the 2008 Agreement with a different partner) in relation to agreements that have been concluded between parties following the breakdown of a relationship.
In my view, whatever the effect on him of the fire on the property (a) he confirmed that he was advised by Mr Moore to take his time about signing the Agreement and to sort out his “banking issues”, and (b) by the time he saw Mr Moore in July 2013, on his own evidence, he was “getting better” in terms of understanding the terms and import of the Agreement, the substance of which he had confirmed he had discussed with everyone and the essential terms of which had been agreed also at an earlier point in time.
The Evidence of Mr Moore
It should be noted [again] here that it was initially put by the Applicant that a crucial file note, dated 15th July 2013, prepared by Mr Moore was (a) deliberately not in the file produced by Mr Moore’s firm (KJB Law) in answer to a subpoena, and (b) prepared/manufactured [only] relatively shortly before the hearing. Ultimately, neither of these points (nor that the file note was in fact fabricated) was pressed.
Mr Moore’s oral evidence may be summarised as follows:[35]
[35] Mr Moore’s cross examination runs from T 20 – 82.
(a)He had no independent recollection of the advice given to Mr Warner on 15th July 2013;
(b)He recalled that he wrote the file note almost immediately after the conference with Mr Warner on 15th July 2013;[36]
[36] T 31.
(c)It was the practice of Mr Moore’s firm not to provide file notes to clients, even when a file was the subject of a subpoena, because of the risk of a lay person mis-understanding abbreviations used in such a note.[37] The file note in question here is at A10-11 at Exhibit C. It commences with a note stating” “Oral advice to save Mr Warner] costs”;
[37] Among a number of places regarding the “file note” in question, see T 44, 48, 62, 74, 78 & 79.
(d)He confirmed that the conference in which he gave advice to Mr Warner was somewhat longer than the 30 minutes which his time and billing records indicate;[38]
[38] Among other things, see the account to Mr Warner from Mr Moore in relation to advice given in relation to the Agreement (on a number of occasions) at A13 in Exhibit C, and more particularly, the schedule to the account at Exhibit A, which sets out the professional charge “units” up to June 2013. See also the discussion about and questions to Mr Moore regarding the length of the conference with Mr Warner at T 55 & 66.
(e)Part of his advice given at that conference with Mr Warner was predicated upon his knowledge of the Applicant’s financial position as it was at the time when Mr Moore acted for him in relation to an earlier financial agreement (dated 1st May 2008) entered into with Mr Warner’s previous partner (that agreement is at C59 – C64 of Exhibit C, together with correspondence with Mr Warner and solicitors acting for his then ex-partner between September 2007 and January 2008);
(f)He said that in order to save Mr Warner costs, and because of his history with the Applicant, he determined that oral advice was the most appropriate course (as earlier noted);
(g)He said that he would have discussed with Mr Warner the advantages and disadvantages of the Applicant signing the Agreement. This was in accordance with his usual practice and what he generally recalls would have occurred on this particular occasion, which included advice on an earlier draft of the Agreement;[39]
[39] Among other places, see T 29 & 63 ff.
(h)The Husband confirmed to Mr Moore, by email dated 17th June 2013 (A8 of Exhibit C), that he agreed with Mr Moore’s advice that the Agreement was financially advantageous (“quite generous”) to him;
(i)Part of the advice (as reflected in the file note) referred to the “contributions” of the parties and how they did or did not affect an assessment of the advantages and disadvantages of entering into the Agreement;[40]
[40] T 32 – 33.
(j)The file note further recorded on Mr Moore’ evidence a consideration and discussion about the assets of the Applicant and their value and how the Agreement recorded or reflected the distribution of those assets including that the amount agreed to be paid to the Respondent, on the general values understood, constituted 12% of the “then property pool”, which Mr Moore said he considered to be a quite generous proposal “as a proportional outcome”;[41]
[41] T 33. In the same place, the file note referred back to the earlier financial agreement in 2008 which recorded Mr Warner’s then net worth. Thus this was a comparator used by Mr Moore. This earlier agreement Mr Moore said he checked prior to meeting with Mr Warner on 15th July 2013.
(k)Advice was specifically given to Mr Warner, as recorded in the file note of the risks to his financial position should there be a decrease in value of his assets.[42] Mr Moore noted that whether or not he had asked questions of Mr Warner about any savings he had (about which there was some conjecture as to whether this had occurred), that if the Applicant did have some savings (which Mr Moore assumed were modest if any) this would have only made the terms of the Agreement even more advantageous to the Applicant;[43]
[42] T 34.
[43] T 69.
(l)He confirmed that he had emailed the Wife’s legal representative on 11th April 2013 indicating or “suggesting” that the parties would likely prefer that there was no asset schedule prepared for the Agreement;[44]
[44] T 69 ff.
(m)At no time did Mr Warner say or indicate to Mr Moore that he was “emotionally devastated”;[45]
[45] T 38 – 39.
(n)There was general and specific discussion about the contributions by the Respondent to the relationship, and about the Applicant’s financial position;[46]
(o)Otherwise, Mr Moore rejected each and every contention as set out in pars 55 and following in Mr Warner’s trial affidavit;
(p)He rejected Mr Warner’s contention that the conference between them on 15th July 2013 was about 15 minutes’ duration. Mr Moore said that he time costed it at 30 minutes but the actual time was longer;[47]
(q)He also rejected that it was necessary for him to know detail concerning a complaint with the (omitted) Bank which Mr Warner had taken to the Ombudsman;[48]
(r)He said that although there was no completed annexure B to the Agreement, because Mr Warner was relevantly aware of the schedule of payments made by the Respondent which he had seen previously it was not detrimental to him to sign the Agreement;[49]
(s)He could not recall if any advice was given to Mr Warner in relation to spousal maintenance; there was no reference to this matter in his file note of 15th July 2013;[50]
(t)He said that the signing the certificate to the Agreement regarding the provision of advice to Mr Warner was [now] a further indication or confirmation to him, in the absence of independent recollection and by reference to his file note that relevant advice was given to the Applicant;[51]
(u)The advice given to Mr Warner at the time of the Agreement was predicated upon the Applicant’s view of the value of his assets at the time. Mr Moore recalled, based on what was in his file note that he had discussed with the Applicant the disadvantages of the Agreement including some discussion and awareness by Mr Moore of various “contributions” of the parties.[52]
Submissions for the Applicant de facto Husband
[46] T 39 – 40. Mr Moore confirmed that he did not ask Mr Warner about matters of “insurance” in relation to his assets.
[47] T 42 & 66 - 67. Mr Moore also gave evidence that ultimately his firm wrote off the legal fees owing by Mr Warner as a commercial decision.
[48] T 70.
[49] T 71 – 72.
[50] T 73.
[51] T 74.
[52] T 76 - 78.
The Applicant’s primary submissions, filed 3rd June 2016, were as follows (footnotes omitted).[53] Again I note that, curiously and unfortunately, there were no references to any Full Court authorities in relation to binding financial agreements in support of the Applicant’s submissions:
[53] For ease of reference, the numbering of paragraphs in the submissions has been amended slightly.
A. This application relates to a financial Agreement dated 15 July 2013.
B. The applicant de facto spouse seeks a declaration that the financial Agreement is not binding on the applicant under s.90UJ of the Family Law Act 1975 (Cwth).
C. In the alternative, the applicant de facto spouse seeks an order that the financial Agreement be set aside pursuant to section 90 UM(5) of the Family Law Act 1975.
D. The applicant seeks that relief on essentially two grounds set out hereunder.
The Agreement is not a Part VIIIAB financial Agreement.
1) Section 90UD of the Act provides as follows:
If:
(a) after the breakdown of a de facto relationship, the parties to the former de facto relationship make a written Agreement with respect to any of the matters mentioned in subsection (2); and
(b) at the time of the making of the Agreement, the parties to the former de facto relationship are not the spouse parties to any other Part VIIIAB financial Agreement that is binding on them with respect to any of those matters; and
(c) the Agreement is expressed to be made under this section;
the Agreement is a Part VIIIAB financial Agreement . The parties to the former de facto relationship may make the Part VIIIAB financial Agreement with one or more other people.
2) The applicant de facto spouse submits that the financial Agreement dated 15 July 2013 is not, as required by section 90UD (c), expressed to be made under that section.
3) The financial Agreement dated 15 July 2013 is in two parts.
4) The first part is a series of recitals (identified as Recitals A – L inclusive).
5) The second part is identified as “Operative Part” and it is submitted that this constitutes “the Agreement” required by section 90 UD (c) to be “expressed to be made under (that) section”.
6) Recital “H” reads as follows:
“In order to arrange their property affairs the parties have agreed to enter into this Agreement under the provisions of section 90 UD of the Family Law Act 1975 to deal with the division of their property, financial resources and maintenance”.
7) Recital “H” says nothing about the parties’ purpose in entering into the Agreement to oust the jurisdiction of the court. The recital professes that the purpose of the Agreement is to “arrange their property affairs”.
8) Nowhere in the “Operative Part” of the Agreement is s.90UD referred to at all.
9) It is submitted that the recitals do not form part of “the Agreement”.
10) As such, the failure to express that “the Agreement” is made under section 90 UD means, in turn, that the Agreement is not a Part VIIIAB financial Agreement, and as such, it is not binding upon either of the parties.
11) This submission requires a consideration of well-established principles in relation to the interpretation of contracts.
Recitals
12) Recitals are not part of the operative provisions of an Agreement and are not necessary to give an Agreement legal effect.
13) Traditionally, the function of a recital is to state facts and circumstances relevant to the making of the document or to explain or give context to its contents.
14) As a general rule, where the operative parts of a deed are clear (and it is submitted that the operative parts of the Agreement dated 15 July 2013 are perfectly clear) the recitals have no effect upon the operative part’s interpretation.
15) A similar, but it is submitted, very much distinguishable case is Ruane & Bachmann-Ruane and Anor .
16) In Ruane the recitals of the Agreement recorded that the Agreement was
i. a financial Agreement
ii. made on 29 October 2008
iii. made pursuant to section 90 C
17) Importantly, (and entirely differently to this Agreement) the judgment of Cronin J records in Ruane (at 20) that the operative part of the Agreement read:
“In pursuance of the premises and in order to give effect” (to the Agreement) “so reached”, (the parties do) “mutually covenant” (a number of things)
18) Counsel for the husband argued that the recitals could not be deemed to be part of the operative Agreement and did not set out or establish the rights and liabilities of the parties except where there was ambiguous language.
19) Counsel for the wife argued that the recitals (which did record that the Agreement arose out of the breakdown of the marriage) were part of the Agreement.
20) His Honour accepted the position of the wife. His Honour accepted that the use of the words “In pursuance of the premises” in the operative part of the Agreement made it clear that there was a “reliance on the recitals”. (para 21)
In this case, there is no similar indication whatsoever that there is any reliance on the recitals at all.
Indeed, this Agreement simply refers to “Recitals” and “Operative Part”. The clear implication is that the recitals are a “Non-operative Part”
21) His Honour said this (at 64 – 65)
“63. In a financial Agreement for the purposes of the Family Law Act, specifically drawn for the purposes of achieving the ouster of jurisdiction offered by s 71A, the distinction between the recital and operative clauses is a distinction without a difference. What must be clear and unambiguous is that the parties objectively intended to oust the jurisdiction and put in place the methodology to resolve their financial affairs should the breakdown of the marriage occur. In Black and Black (supra) the Full Court referred to strict compliance with statutory requirements. The fulfilment of those requirements may be gleaned from the recitals if the whole of the document addresses those matters and is properly executed. (See also ASIC and Rich and Anor (supra))
64. Thus, if it is clear that the parties intended the document to be a financial Agreement then the necessary statutory references required to make it binding can be set out in recital clauses. As a matter of precaution, the operative clauses should make clear that reliance is placed upon the recitals. However, even if the incorporation by reference is not made, a court can still read into the financial Agreement, the reliance upon the recitals. The only time that could not occur would be if there was an obvious inconsistency between a recital clause and an operative clause. Such an inconsistency however would have to go towards a failure to incorporate one of the statutory requirements. What the parties also need to do is show that based upon satisfying all of the requirements of the Act, the operative part of the Agreement deals with the division of property (and if necessary, spousal maintenance) and that there is an intention to oust the jurisdiction.”
22) It is submitted, having regard to His Honour’s words:
i. In this case, it is not clear nor is it unambiguous that the parties objectively intended to oust the jurisdiction of the court.
Recital “H” says that the purpose of the Agreement is for the parties to “arrange their property affairs”.
On the other hand, the “operative part” of the Agreement makes no reference whatsoever to anything that could be inferred to show that the parties intended to oust the jurisdiction of the court.
ii. His Honour went on to state (at 64) “even if the incorporation (of the recitals) by reference is not made, a court can still read into the financial Agreement, the reliance upon the recitals. The only time that could not occur would be if there was an obvious inconsistency between a recital clause and an operative clause. Such an inconsistency however would have to go towards a failure to incorporate one of the statutory requirements. (Emphasis added).
It is submitted that this is precisely such a case where there is “an obvious inconsistency between a recital clause and operative clause”, that goes directly to a “failure to incorporate a statutory requirement” (that is, the reference to section 90 UD).
Clearly, the recital clause suggests that the Agreement is under section 90 UD, and the operative part of the Agreement does not. That is a very significant obvious inconsistency that directly relates to a failure to incorporate the requirement of section 90 UD (c).
Similarly, whilst recital H suggests that the Agreement is to deal with maintenance, the operative part of the Agreement does not deal with maintenance at all.
iii. Finally, this Agreement does not satisfy in any way His Honour’s suggested requirement at para 65 “What the parties also need to do is show that based upon satisfying all of the requirements of the Act, the operative part of the Agreement deals with the division of property (and if necessary, spousal maintenance) and that there is an intention to oust the jurisdiction.”
23) His Honour Cronin J was taken to the decision of the High Court in Codelfa Construction Proprietary Limited v State Rail Authority New South Wales which is authority for the proposition that:
“The true rule is that evidence and surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.”
24) Since the decision in Ruane the New South Wales Court of Appeal handed down judgment in Franklins Proprietary Limited v Metcash Trading Limited Square (2009) NSW CA 407. Further, the High Court refused leave to appeal against the decision of the New South Wales Court of Appeal in Western Export Services Inc v Jireh International Proprietary Limited (2011) 282 ALR 604 and in doing so confirmed that Codelfa is binding authority.
25) In Metcash there is a very detailed review by His Honour Campbell JA of the authorities on the point as to whether regard may be had to recitals to assist in interpretation only when the operative parts of the deed are ambiguous. His Honour suggested, following his review of the authorities, that regard may be had to recitals without a need to find ambiguity in the operative parts of the deed.
26) However, His Honour concluded:
“That a recital can be looked at as part of the surrounding circumstances of the contract still leaves room for the rule (accepted by intermediate courts of appeal in Australia and by Isaacs J in Bebarfalf & Co Ltd v MacIntosh) that where the recital is in conflict with the true interpretation of an operative provision (according to the modern standards of interpretation), the operative provision prevails. Strictly speaking, that is not so much a rule of construction as a reflection of the fact the recitals are not operative provisions in contract”(emphasis added)
27) In Jireh the High Court disapproved of the approach taken in Metcash but did not consider use of recitals in contract interpretation. Therefore the comments of the court regarding the legal effect of recitals in Metcash are still good law.
Conclusions in relation to the recitals point
28) Recitals are not operative provisions in a contract. (O’Loughlin, Metcash).
29) The recitals are not incorporated into the operative parts of this Agreement.
30) Recital H is not an operative provision in this Agreement.
31) Accordingly, “the Agreement” is not expressed to be subject to section 90UD.
32) Regard may be had to recitals as an aid to interpretation when (and it is submitted only when) the operative parts of the deed are unclear, without the need to establish “ambiguity”. (Codelfa, Metcash)
33) The operative parts of this Agreement are entirely clear.
34) Where a recital is in conflict with an operative provision, the operative provision prevails. (Metcash)
35) To the extent that Ruane accepted that the recitals in that particular Agreement were part of the operative part of the Agreement, the case is distinguishable because:
· in that case His Honour accepted that the recitals were incorporated into the Agreement either by reference or simply by explicit indication and
· the recital in that case in any event made it clear that the Agreement was made pursuant to section 90 C, whereas recital H does not.
36) To the extent it might be argued that Ruane is authority for the proposition that there is no difference between a recital and an operative clause (“the distinction between the recital and operative clauses is a distinction without a difference”) it is submitted with respect that His Honour was in error.
In any event, the applicant de facto spouse did not receive the requisite advice required by section 90UJ(1)(b)
37) This is the second basis that the applicant de facto spouse attacks the Agreement upon.
38) S.90UJ(1) relevantly provides:
“Subject to subsection (1A), a Part VIIIAB financial Agreement (other than an Agreement covered by section 90UE) is binding on the parties to the Agreement if, and only if:
….
(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); …”
39) The Agreement signed by the parties forms pages 17 – 25 inclusive of exhibit “W 1”.
40) Annexed to the Agreement (at page 23) is a form of certificate said to be in compliance with section 90 UJ (1) of the Act.
41) The certificate is “no more than a rebuttable presumption of fact” in terms of the advice that it says was given. The applicant de facto spouse is entitled to lead evidence to rebut it.
42) The certificate, in any event, is not in compliance with section 90 UJ (1).
The certificate professes at clause 2 (a) that the solicitor has advised the applicant de facto spouse of “the effect of this Agreement on the rights of the parties” (emphasis added).
Section 90 UJ (1) of course requires that the advice should be given about the effect of this Agreement on the rights of the party (only).
43) In any event, the evidence in relation to the advice given to the applicant de facto spouse by his lawyer is contained in paragraphs 58, 60, 71, 74, and 75 of his affidavit. In short, the applicant de facto spouse says:
i.He was told about the initial version of the Agreement that he showed Mr Moore, which is not the same as the Agreement signed, that “It doesn’t seem overly onerous. It’s pretty fair” (58)
ii.He was told in relation to the Agreement that he actually signed that “This is favourable to you, you should sign it” (71)
iii.He was not given any advice about the effect of the Agreement on his rights, or indeed, the other party’s rights
iv.He was not given any advice about the advantages and disadvantages of him making the Agreement, other than the Agreement was “favourable”
44) The file of the applicant de facto spouse’s former lawyers, as released to him, is exhibited.
45) There are only two documents contained in the file they [sic] could be set [sic: “said”] in any way to offer any advice to the applicant de facto spouse.
The first is an email dated 4 April 2013. That email suggests that the solicitor has had a “cursory perusal” of the initial Agreement that he showed Mr Moore (which is not the same to that which was signed) and has formed the view of that Agreement that the terms are “very fair and reasonable”, subject to a rider: “I offer this comment on the premise that your property has (hopefully) significantly increased in value during your relationship with Ms Cummings, and all that she requires is reimbursement of the money that she has contributed to the property…”
How the solicitor could have made the assumption that the property had significantly increased in value when he was instructed by the applicant de facto spouse of the devastating fire that had burnt it out, is quite extraordinary.
The email suggests that there was also a “very magnanimous gesture” by the respondent de facto spouse in allowing an “open-ended” timeframe for payment. This was later amended in the Agreement that was signed in the event.
The email then provides:
“It is our policy to provide the required independent legal advice in writing, with such written advice provided by me usually amounting to a dozen or more pages given that, whilst on the surface the Agreement is pretty straightforward, there are many legal issues and explanations provided in relation to the Agreement (some of which I have briefly touched on above)”
46) The only other document contained in the file produced to the applicant de facto spouse that could possibly be suggested to provide any advice in relation to the financial Agreement appears at page 16 of the exhibit, being a letter to the applicant de facto spouse. The only possible part of that letter that would constitute any advice whatsoever reads as follows:
“My advice is usually very comprehensive and amounts to a lengthy letter of over a dozen pages. However given that the terms of the Agreement are so favourable to you my advice will not need to be that detailed.
Could you please telephone or email me to provide an indication as to when you will be in a position to sign the Agreement so that I might prepare and forward to you the independent legal advice to ensure you have received same prior to your attendance to execute the Agreement”
The “independent legal advice” was neither prepared nor forwarded to the applicant de facto spouse.
47) It is submitted on the evidence of the applicant and the file produced to him exhibited that there was no advice rendered to him either at all or alternatively in compliance with the requirements of section 90 UJ (1) (c).
48) In the absence of the requisite advice being given, the Agreement is not binding unless the court finds that it would be unjust and inequitable for the Agreement not to be binding pursuant to section 90 UJ (1A) (c).
49) In all of the circumstances of this case, it would be submitted that the court would not be so satisfied.
The Applicant filed further submissions on 6th July 2016. Again, curiously and unfortunately, there was no consideration given and no reference to any Full Court authorities in relation to binding financial agreements.
Two particular matters should be noted in relation to these further submissions.
First, at par.8 of the submissions there is specific reference to the Applicant’s position at trial that he was never given relevant advice by his former solicitor in relation to the Agreement. The following paragraphs in the further submissions are predicated upon this position. Yet at the conclusion of the hearing, the Applicant’s solicitor specifically withdrew the contention/allegation, because there was no evidence to support it and evidence specifically to contradict it, that (a) no advice was ever given and (b) the file note of the solicitor had been either fabricated or written only shortly prior to the hearing. Having withdrawn and or not being in a position to support those serious if not dangerous propositions, the remainder of the submissions, to the degree that they rely upon those propositions must be seriously suspect because they are founded on inaccurate, unsupported and “not pressed” contentions.
Secondly, the submissions (e.g. in par.10) contend that the Applicant’s evidence was that he had a “clear memory” of what happened at the conference with his former solicitor on 13th July 2013. Yet he also said in evidence that he was suffering from the stress following the fire on the property.
The Applicant’s further submissions were as follows (some of the submissions are also based on the Applicant’s notes during the trial rather than from the transcript):
1. These submissions are filed on behalf of the applicant de facto spouse pursuant to order 1 of the Court made on 8 June 2016.
2. The applicant’s case is put on two bases:
a. the Agreement is not a Part VIIIAB financial Agreement and
b. if the Agreement is held to be a part VIIIAB financial Agreement, then the requisite advice required by section 90 UJ (1) (b) was not provided to the applicant de facto spouse.
The first basis
3. In relation to the first basis, the applicant de facto spouse relies on the submissions made in the Outline of Submissions dated 3 June 2016 and filed herein.
The second basis
4. In relation to the second basis, the applicant de facto spouse also relies on the submissions made in the Outline of Submissions dated 3 June 2016 and filed herein.
5. However, those submissions were made on the basis of the evidence of the applicant de facto spouse contained in his affidavit affirmed 12 November 2015, and the file that was produced to him by his former solicitors that formed exhibit W 1 to his affidavit.
6. That file did not contain the file note dated 15 July 2013 that Mr Moore gave evidence that he had made.
7. At the hearing, Mr Moore gave oral evidence in relation to the alleged advice that he had provided the applicant de facto spouse, and particularly, relied upon that file note dated 15 July 2013 that was produced for the first time upon his file been subpoenaed by the parties.
8. Suffice to say, the applicant de facto spouse’s position has always been, and continued to be when he gave oral evidence, that the advice that Mr Moore alleged that he had provided and relied upon the file note as evidence of, was never given.
9. This leaves two positions open to the applicant de facto spouse. The first, which the applicant de facto spouse would urge the court to adopt, is to accept his evidence in preference to that of Mr Moore.
10. In support of this option, the applicant de facto spouse submits as follows:
a. The applicant de facto spouse had a clear memory of the conference that occurred on 15 July 2013. On this point, he was not, it is submitted, shaken in cross-examination.
By comparison, Mr Moore relied on the file note to refresh his memory. In cross-examination, he repeatedly conceded that he had no independent recollection of the advice that he said he had given.
b. The file note was not completed by Mr Moore contemporaneously with the conference. In evidence, Mr Moore conceded that he created the file note immediately after the conference.
That, of itself, means that inevitably there was a degree of reconstruction in the file note.
11. The second position available to the applicant de facto spouse is that if the Court accepts that the file note accurately reflects the advice given by Mr Moore, then that advice still is not sufficient for the purposes of section 90 UJ (1) (b).
12. Section 90 UJ (1) (b) provides, for a Financial Agreement to be binding, that:
“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”
13. Importantly, the section does not allow for advice to be given about “some of” the rights of the parties or “some of “the advantages and disadvantages to the party of making the Agreement.
14. In this regard, if the Court accepts that the file note does reflect the advice that was given by Mr Moore, then the Court should take into account the following:
a. It is impossible, it is submitted, for advice to be given about the effect of the Agreement on the party’s rights and the advantages and disadvantages to the party of making the Agreement in the absence of any understanding by the legal practitioner of the financial circumstances of the parties.
In the absence of such understanding, it is submitted that the best the advice could possibly be is not advice about “the advantages and disadvantages… to the party of making the Agreement”, but rather, can only be advice about the presumed advantages and disadvantages based on a guess as to the parties’ circumstances, which may or may not be accurate.
In this regard, the evidence of the applicant de facto spouse is that he was never asked about his financial circumstances, or the respondent de facto spouse’s financial circumstances (paragraph 60). This was in the context of him having told Mr Moore about the fire and the devastating impact it had upon the property and his livestock.
It is submitted that that evidence should be accepted.
b. The file note only says this about the asset pool:
“T confident that property and stock/machinery worth well in excess of a $mill (map) L’s payout – only 12%” and
“Note: property pool (excl super)@time of settlement with former wife (2007 to 2008) was 840 K net”
c. Mr Moore repeatedly said in cross-examination that he had no independent recollection of the conference, and conceded that there had never been any financial disclosure process during the course of the negotiations.
d. In evidence in chief, Ms Tonkin took Mr Moore to paragraph 60 of the applicant de facto spouse’s affidavit. She specifically put to him the applicant de facto spouse’s allegation contained in that paragraph that he had “never asked about Ms Cummings’s financial circumstances”. Mr Moore responded in words to the following effect (taken from the writer’s notes, but without the benefit of a transcript):
“Other than confirm what she would be retaining from the property I cannot quite recall and whether she was working, beyond that, no”
e. What Mr Moore solely focused on was the assets held by the applicant de facto spouse. This is reflected in his file note where he calculates the payout figure to the applicant to be “only 12%”. Clearly what he did, and this was conceded in cross-examination, was divide the payout figure to the respondent de facto spouse by the (guessed) value of the assets held by the applicant.
f. Mr Moore had simply no knowledge whatsoever of the respondent de facto spouse’s financial circumstances.
Notwithstanding that, he certified that he had given the applicant de facto spouse advice “about the effect of the Agreement on the rights of the parties and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the Agreement”
g. In the absence of any knowledge of the respondent de facto spouse’s assets, liabilities, or financial resources, it is submitted that it was impossible for Mr Moore to give that advice. The only advice that he could have given was about the advantages and disadvantages to the applicant de facto spouse of an Agreement that presumed the respondent de facto spouse had no assets. Unfortunately, the Agreement did not presume that. The Agreement dealt with all of the assets and liabilities of the parties.
To put it another way, this Agreement dealt with all of the assets and liabilities of the parties. The advice that Mr Moore gave was only based on knowledge of the applicant de facto spouse’s assets and liabilities. It therefore could not have been advice about the advantages and disadvantages of this Agreement that dealt with far more than just the applicant’s assets and liabilities.
h. In addition to the issue of not having any knowledge of the asset pool, there are a number of advantages and disadvantages of the Agreement that, even if the file note is accepted as evidence of what Mr Moore advised the applicant factor spouse of, were never addressed by Mr Moore. These matters include:
i. Spousal maintenance.
Recital H to the Agreement evidenced that the parties had agreed to enter into the Agreement “in order to arrange their property affairs… to deal with the division of their property, financial resources and maintenance”. (Emphasis added).
Recital I to the Agreement evidenced the parties’ intention to “avoid litigation in relation to the division of the property and financial resources and maintenance” (emphasis added).
Notwithstanding recitals H and I, the Agreement was entirely silent thereafter in relation to anything to do with spousal maintenance.
Potentially, it was both an advantage to the applicant de facto spouse that the Agreement did not exclude spousal maintenance, and also, potentially a disadvantage to him that spousal maintenance was not excluded, notwithstanding the fact that the parties intended to deal with the issue as evidenced by recitals H and I.
Nowhere, whether in evidence or in his file note, does Mr Moore suggest that he gave the applicant de facto spouse any advice whatsoever about either the potential advantages or potential disadvantages to him of spousal maintenance not being excluded by the Agreement, notwithstanding the party’s intention to do so.
The writer’s recollection is that this issue was specifically put to Mr Moore in cross-examination and he confirmed that he gave no advice in relation spousal maintenance at all the applicant de facto spouse.
ii. In cross-examination, Mr Moore was taken to an email that he wrote to the applicant de facto spouse on 20 June 2014. That document appears in the respondent de facto spouse’s tender bundle at pages A 19 – A 21 inclusive.
In that document, Mr Moore provided advice to the applicant de facto spouse about significant matters affecting the rights of any person entering into a financial Agreement. In effect, Mr Moore covered the circumstances whereby under section 90 UM of the Act the Court can set aside a financial Agreement.
In cross-examination, Mr Moore conceded that all of these matters were significant components of the financial Agreement that affected the rights of the applicant de facto spouse. He could not recall giving advice to the applicant de facto spouse about any of those matters prior to the email of 20 June 2014. His file note does not indicate that he gave advice on any of those matters.
iii. The file note is completely silent as to any instructions received or advice given in relation to the contributions of the parties pursuant to section 90 SM (4) (c).
It was put to Mr Moore in cross-examination that one of the disadvantages of the applicant de facto spouse entering into this Agreement at the time he did was it was entirely impossible for Mr Moore to tell him whether the Agreement was appropriate in the absence of that knowledge.
Despite Mr Moore’s repeated evidence that he had no independent recollection of the advice given in the conference other than as aided by the file note, he suggested that he felt he had “sufficient background knowledge” of the relationship of the parties to assume that “they had both contributed around the property”.
With respect to Mr Moore, this simply could not be accurate. He had no instructions in relation to section 90 SM (4) (c) contributions, and he gave no basis whatsoever to suggest that he ever received any instruction sufficient to qualify as “background knowledge” sufficient to make this assessment.
iv. In cross-examination, Mr Moore was asked whether he ever gave any advice to the applicant de facto spouse that it was a disadvantage of the Agreement that there were more grounds to set it aside than had the matter been resolved by way of consent orders (s. 90 UM as compared to section 79A).
Mr Moore said that he could not recall that that advice had been given or not. It was not referred to at all in the file note.
The only conclusion on the evidence available was that it was not given.
v. In cross-examination, Mr Moore was asked whether he gave any advice to the applicant de facto spouse about the disadvantage of the recitals not having been incorporated into the Agreement. Again, Mr Moore’s evidence was that he could not recall giving that advice.
The only conclusion on the evidence available was that it was not given.
vi. Again, it is submitted that Section 90 UJ (1) (b) does not allow for advice to be given about the effect of the Agreement on “some of” the party’s rights, or “some of” the advantages and “some of” the disadvantages to the party of making the Agreement.
Even if the Court accepts that the advice referred to in the file note was given, clearly, there were significant matters set out in paragraph 14(h) of these submissions that were advantages, disadvantages, and sometimes potentially both, that Mr Moore did not advise upon.
Section 90 UJ(1A)(c)
15. If the court finds that the requisite advice was not given, then the Agreement is not binding unless the court finds that it would be unjust and inequitable for the Agreement not to be binding.
16. The applicant de facto spouse submits that the court would not be so satisfied in the circumstances of this case.
17. It is submitted that the advice provided was so deficient, and was given in circumstances of very significant personal and economic turmoil of the applicant de facto spouse. These are matters that should be taken into account in considering the justice and equity of the Agreement being set aside.
18. Further, it can hardly be inequitable if in these circumstances the Agreement is set aside given that the respondent de facto spouse would then be at liberty to bring property settlement proceedings. To set aside the Agreement is not an absolute bar to the respondent de facto spouse’s rights – it simply requires her to then pursue a just and equitable resolution of those rights through the court process.
Estoppel
19. The issue of estoppel was raised by Your Honour during the course of the hearing.
20. The applicant de facto spouse relies upon the decision of the Family Court in Fevia & Carmel-Fevia [2009] FamCA 816 where it was held (at paragraph 294) that estoppel has no operation to section 90 G of the Act, which obviously directly relates to the consideration of this certificate under section 90 UJ.
Submissions for the Respondent de facto Wife
The Respondent’s primary submissions were filed on 7th June 2016. They were as follows (emphasis in original):
Applications:
1. The applicant seeks a declaration that the financial Agreement entered into by the parties on 15th July 2013 is not binding on the Applicant pursuant to section 90UJ of the Family Law Act (Cth).
2. In the alternative that the financial Agreement be set aside pursuant to section 90UM (5) of the Family Law Act (Cth).
Response:
3. The respondent seeks on order dismissing the applications and the following further orders:
(a) A declaration that the financial Agreement entered into by the parties on 15th July 2013 (“the Agreement”) is a Part VIIIAB financial Agreement pursuant to the Family Law Act 1975 (Cth);
(b) A declaration that the Agreement is binding on the parties pursuant to section 90UJ (1B) of the Family Law Act 1975 (Cth);
(c) Within 14 days of the date of the Order, the Applicant pay the Respondent the amount of $121,848.25 together with interest at the rate prescribed by the Family Law Rules from 17th May 2015;
(d) The Applicant pay the Respondent’s costs of and incidental to the applications.
Short history
4. The parties commenced a de facto relationship in July 2007. They separated on a final basis in June 2012. There were no children of the relationship. Both parties have adult children from previous marriages.
5. During the relationship the parties lived on the Applicant’s farm at (omitted), N.S.W. known as Property E. During the relationship the Respondent contributed financially to the property including loaning the Applicant $121,848.25. The loan was recorded on the Property E Pastoral Company accounts for the year ending 30th June 2013.
6. On 15th July 2013 the parties entered into a written Agreement (“the financial Agreement”) dividing their property on a final basis. The terms of the Agreement provided for the Applicant to pay the Respondent the full amount of the loan.
7. On 12th November 2014 the Respondent placed a caveat on the Property E property. Subsequently the Property E property was sold.
8. Since entering into the financial Agreement, the Applicant has failed to pay the Respondent any amount due to her under that Agreement.
Part VIIIAB of the Family Law Act
9. Section 90UD provides:
“Financial Agreements after breakdown of a de facto relationship
s.90UD (1) If:
(a) after the breakdown of a de facto relationship, the parties to the former de facto relationship make a written Agreement with respect to any of the matters mentioned in subsection (2); and
(b) at the time of the making of the Agreement, the parties to the former de facto relationship are not the spouse parties to any other Part VIIIAB financial Agreement that is binding on them with respect to any of those matters; and
(c) the Agreement is expressed to be made under this section;
the Agreement is a Part VIIIAB financial Agreement. The parties to the former de facto relationship may make the Part VIIIAB financial Agreement with one or more other people.
(2) The matters referred to in paragraph (1) (a) are the following:
(a) how all or any of the:
(i) property; or
(ii) financial resources;
that either or both of the spouse parties had or acquired during the former de facto relationship is to be distributed;
(b) the maintenance of either of the spouse parties.
(3) A Part VIIIAB financial Agreement made as mentioned in subsection (1) may also contain matters incidental or ancillary to those mentioned in subsection (2).
(4) A Part VIIIAB financial Agreement (the new Agreement) made as mentioned in subsection (1) may terminate a previous Part VIIIAB financial Agreement (however made) if all of the parties to the previous Agreement are parties to the new Agreement.”
10. On 15th July 2013 the parties entered into a written Agreement (“the financial Agreement”) dividing their property on a final basis. The terms of the Agreement provided for the Applicant to pay the Respondent the full amount of the loan. The financial Agreement is expressed to be pursuant to section 90UD of the FLA an Agreement which makes provision as to how the property and financial resources of the parties are to be distributed following the breakdown of the relationship. The written Agreement entered into by the parties on 15th July 2013 contains the following:
· Recitals which record admissions of fact including the existence of a de facto relationship, the breakdown of the de facto relationship in June 2012 and the fact that the parties had separated at the time of entering the Agreement. Further reference is made to the parties’ common intention to enter into the Agreement dividing their property on a final basis;
· The Agreement was expressed to be made under subsection 90UD of Part VIIIAB of the Family Law Act (Title page, Recital H, reference to “this Agreement” in Part 1 of Operative Part, Certificate under ss.90UJ and declaration under ss.90UF);
· In accordance with subsection 90UF of the Act one of the parties had completed a separation declaration which was attached to the Agreement and dated 26th June 2013;
· The Agreement contained provisions as to how the parties’ property and financial resources were to be distributed (clauses 2 and 3) on a final basis and an admission that the parties intended to give full effect to the Agreement and to be bound by its terms.
· The written Agreement was a financial Agreement.
Is the Agreement binding?
11. Section 90UJ provides:
When financial agreements are binding
s.90UJ (1) Subject to subsection (1A), a Part VIIIAB financial Agreement (other than an Agreement covered by section 90UE) 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.
s.90UJ (1A) A Part VIIIAB financial Agreement (other than an Agreement covered by section 90UE) 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.
…………….
12. The requirements for the Agreement to be binding on the parties are set out in section 90UJ above. If the requirements are satisfied, then prima facie the Agreement ousts the jurisdiction of the Court to deal with the matters properly within its provisions.
13. In the event that some of the provisions in section 90UJ are not complied with the Court may (still) declare the Agreement binding if it would be unjust and inequitable not to do so (ss90UJ (1A)). In the alternative, such an Agreement may be set aside if the Court is satisfied as to any of the matters referred to in section 90UM.
14. The applicant contends the Agreement is not a “Part VIIIAB financial Agreement” based on the construction of the document.
15. Subsection 90UD (1) of the FLA provides:
“s.90UD (1) If:
(a) after the breakdown of a de facto relationship, the parties to the former de facto relationship make a written Agreement with respect to any of the matters mentioned in subsection (2)
There is no requirement for the written Agreement to take any particular form. In Cording v Oster [2010] Fam CA 511 Cronin J discussed the approach to be taken when considering whether an Agreement could be declared a financial Agreement under the Act. He referred at [4] to “the reasonable and objective bystander test” which must be applied.”
16. Further in Cording v Oster (supra) Cronin J said at [41] to [43] referring to the application of section 90UN of the Act that “for a contract to be deemed uncertain, the Court must be unable to attribute to the language of the parties a clear and precise meaning such as would enable it to identify the scope of the respective rights and obligations under the contract (Meehan v Jones [1982] 149 CLR 571).”
17. At [43] His Honour said:
“[43] Halsbury’s Laws of Australia (paragraph 110 onwards) expands and clarifies that to say that as long as it is capable of a meaning, it will ultimately bear that which the court decides is its proper construction…the language of the parties should be interpreted broadly and fairly…..if the language employed is so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention, the Agreement will not be enforceable. However so long as it is not utterly impossible to place a reasonable meaning on the language used and to discern the parties’ intention, the Agreement will be enforced.”
18. The complete written Agreement includes the title page which provides “Part VIIIAB financial Agreement between Ms Cummings and Mr Warner”, the Recitals in particular H, I, J, K, L and the Operative Part. Part 1 of the Operative Part makes reference to “this Agreement” which it is submitted incorporates the whole of the Agreement. The recitals note the parties’ subjective and common intention to enter into an Agreement under section 90UD of the FLA to divide their property on a permanent basis following separation. Both the recitals and the Operative Part refer to the loan owed to the Respondent. The Operative Part sets out how the parties’ property is to be divided (clauses 2 and 3), confirms that each party has received independent legal advice before the Agreement was signed (clause 4), deals with other matters (clauses 5 and 6) as permitted under section 90UD. Annexed to the Agreement are statements in accordance with section 90UJ (1) and a separation declaration as required under section 90UF of the FLA.
19. It is clear that the subjective and common intention of the parties was that the Agreement be an Agreement for the purposes of Part VIIIAB of the Act. The statutory provision under section 90UD (1) (a) of the Act requires no more than the parties enter into a “written Agreement.” There is NO requirement as to form nor any requirement that the parties draft a written Agreement preserving the distinction between recitals and the operative part. Emphasis is on the substance of the written Agreement, and whether the contract is a valid financial Agreement. Cronin J noted in Ruane v Bachmann – Ruane and Anor [2009] FamCA 1101 at [49] that there was no requirement that a document have a particular style or formality. He noted that the Full Court in Black v Black [2008] FLC 93 – 357 had said at [45] that “strict compliance with the statutory requirements is necessary to oust the court’s jurisdiction to make adjustive orders under s 79.” No mention was made of any particular form of written Agreement. The statutory provisions are silent on the form of the written Agreement.
20. In Cole & Abati [2016] FamCAFC 78 (13 May 2016) the Full Court considered an appeal where it was alleged that the trial judge had erred in relation to her construction of the Agreement. The Court rejected this argument and found at [48] that there was no obligation on the Court to refer to ‘relevant established principles of construction’ precisely because those principles are so well established that they only require statement if they might be of assistance in interpreting any ambiguity or uncertainty. Further there was no need to explain the effect of any clauses where the effect was obvious, namely that while recitals are ordinarily not treated as being operative provisions the recitals were here to be regarded as if they were operative provisions. The Court found having regard to the entire Agreement that there was no doubt the parties’ common intention was to contract out of Part VIII.
21. In Ruane v Bachmann – Ruane and Anor [2009] FamCA 1101 Cronin J correctly concluded at [10] that regarding whether “the statutory requirements of Part VIIIA must be strictly followed, it did NOT matter that some requirements were set out, mentioned or detailed in recital clauses rather than what are traditionally known as ‘operative clauses’.”
22. Cronin J said further in Ruane v Bachmann – Ruane and Anor (supra) (noting that section 90UD is expressed to be in similar terms to section 90D):
“[27] A financial Agreement is defined by the Act to mean an Agreement specifically referred to in s 90B, s 90C or s 90D.
28. One of the three sections is applicable depending upon the time of the relationship at which the Agreement was executed.
29. One purpose for entering into a financial Agreement is to conclude financial arrangements without recourse to the various provisions of Part VIII of the Act. Another purpose is as a financial planning tool to ensure that in the event of a breakdown of a relationship, resort cannot be had to the provisions of Part VIII. This latter purpose is a direct endeavour to exclude the jurisdiction of a court exercising the powers in Part VIII. (See s 71A of the Act).
30. It is not to the point that the financial Agreement purports to oust the jurisdiction of the Court but rather that the compliance with the requirements of the Act gives rise to the ouster of the jurisdiction.
31. If there is a dispute about whether the jurisdiction is excluded, the Court is obliged to carefully scrutinise what the parties have done. The exclusion is determined by the fulfilment of the statutory requirements.
32. Strict compliance with the statutory requirements is necessary. (See Black and Black [2008] FamCAFC 7; (2008) FLC 93-357).”
23. In Ruane v Bachmann – Ruane and Anor (supra) the husband complained that important issues required by the Act were not covered in the operative part of the Agreement. The wife argued that the recitals were part of the contract and that the only circumstances where they would have no relevance would be where the operative part of the contract was clear and the recitals were inconsistent with the operative clauses. The Applicant in the instant case raises a similar complaint. His Honour Cronin J found as follows:
“[39] In respect of the recital argument, I accept the position of the wife for the reasons set out below.
…………
………..
[50] The first question is whether the financial Agreement is a valid, enforceable or effective financial Agreement.
[51] Section 90KA importantly provides that when a court is determining the validity of such an Agreement it shall apply the principles of law and equity applicable to contracts. That provision therefore gives rise to issues of whether the parties had an Agreement in a contractual sense.
[52] Murphy J in Fevia and Carmel-Fevia [2009] FamCA 816 observed:
120. If an Agreement purports by its terms to exclude the operation of Part VIII of the Act in respect of the matters the subject of the Agreement, there is potential for there to be a collision between the principles of contract and equity applicable to the contract and principles of family law arising under, and from, the Act. The potential for there to be a collision between those principles occurs, though, only where one of the contracting parties asserts that, despite the terms of the contract, the court may make orders pursuant to Part VIII of the Act in respect of matters the subject of the Agreement. In that event, the court can make orders if one or more of a number of matters can be established.
[53] In respect to the reference to a collision, such a collision may not be apparent until one of the parties raises the Agreement in a court application. That would occur:
(a) where there is a dispute about whether the Agreement is a financial Agreement. A financial Agreement can only bind the parties if it is valid within the meaning of Part VIIIA; or
(b) where there is a need to enforce the provisions of the financial Agreement.
For those purposes, the provisions of contract law referred to in s 90KA apply to validity and the principles of equity apply to the issues of enforcement.
[54] In contract law, principles of estoppel arise in relation to the creation of rights where non-contractual promises and representations are made. Those matters are unlikely to arise in an Agreement under Part VIIIA because there needs to be a written Agreement in the first place. Representations as to what the parties were offering and intending are also catered for in Part VIIIA because of s 90K. That provision presupposes at least an Agreement which can then be set aside on all of the bases well-known in contract law such as mistake, misrepresentation, deceptive conduct, duress, undue influence and unconscionability.
………….
[56] A contract is valid if:
(a) Agreement is reached based on an offer and an acceptance of the offer;
(b) each party has provided consideration in return for the obligations undertaken by the other;
(c) the parties objectively intend the Agreement to create legal relations between them; and
(d) the Agreement is complete and certain.
…………
……….
[59] The certainty or completeness of an Agreement is a matter of degree. The parties have to agree on all of the essential terms. (See Thornby [sic: “Thorby”] v Goldberg [1964] HCA 41; (1964) 112 CLR 597 at 607). In a financial Agreement under s 90C of the Act, certainty and completeness means that there can be no dispute about what the parties expected to happen in the event of breakdown of the relationship. It is hard to imagine any other intention here than to have each party conclude their disputes by reference only to the terms of the Agreement.
[60] It is possible for courts construing contracts to imply obligations relating to each step necessary to complete a particular Agreement between parties (See Cavallari v Premier Refrigeration Co Pty Ltd [1952] HCA 26; (1952) 85 CLR 20 at 27) but there are other times where the complexity of the circumstances would cause a court to decline to imply the terms of a contract as for example, where there is a series of documents said to contain the terms (see Milne v Attorney-General (Tas) [1956] HCA 48; (1956) 95 CLR 460).
[61] On the face of this financial Agreement, the parties had clearly negotiated (they said so in writing), had provided consideration in return for various obligations and had intended the Agreement to create legal relations between them. The question is therefore whether the Agreement is complete and certain.
[62] Some uncertainty revolves around the question of the distinction between the “recital” clauses and the “operative” clauses. Both the husband and the wife relied upon Codelfa Constructions Pty Ltd v State Rail Authority of NSW (supra). The issue in that case was whether an implied term could be read into a contract. The construction contract provided that work would be done all night over a period of time and time was of the essence. When injunctions based on noise pollution were granted against the contractor, precluding night work, the company sought to have an implied term read into the contract that completion time would be extended or that additional money should be paid to it under the contract. The High Court of Australia refused to allow the implied term. Mason J (at page 463) said that evidence of surrounding circumstances was admissible to assist in the interpretation of the contract if the language was ambiguous or susceptible of more than one meaning but not where the language was plain. His Honour said that “generally speaking”, facts existing when the contract was made could not be used as an aid to construction of the contract unless they were known to both parties. Brennan J (at page 485) tightened the test and said that the meaning of a written contract could be “illuminated” by evidence of facts to which the written document referred because the language conveyed meaning according to the circumstances in which they were used. His Honour said that the necessity for a term to be implied had to appear from and in, the express terms of the contract not from the extrinsic circumstances.
[63] In O’Loughlin and Ors v Mount and Mount [1998] SASC 6672 there was an argument about the use to which recital clauses could be put because there was an inconsistency between the recital and what was described as the operative part of the Agreement. Lander J held that where the operative part was clear and unambiguous, those words were not to be read down even if inconsistent with the recital clause. That was because the recitals were subordinate to the operative part.
[64] In a financial Agreement for the purposes of the Family Law Act, specifically drawn for the purposes of achieving the ouster of jurisdiction offered by s 71A, the distinction between the recital and operative clauses is a distinction without a difference. What must be clear and unambiguous is that the parties objectively intended to oust the jurisdiction and put in place the methodology to resolve their financial affairs should the breakdown of the marriage occur. In Black and Black (supra) the Full Court referred to strict compliance with statutory requirements. The fulfilment of those requirements may be gleaned from the recitals if the whole of the document addresses those matters and is properly executed. (See also ASIC and Rich and Anor (supra))
[65] Thus, if it is clear that the parties intended the document to be a financial Agreement then the necessary statutory references required to make it binding can be set out in recital clauses. As a matter of precaution, the operative clauses should make clear that reliance is placed upon the recitals. However, even if the incorporation by reference is not made, a court can still read into the financial Agreement, the reliance upon the recitals. The only time that could not occur would be if there was an obvious inconsistency between a recital clause and an operative clause. Such an inconsistency however would have to go towards a failure to incorporate one of the statutory requirements. What the parties also need to do is show that based upon satisfying all of the requirements of the Act, the operative part of the Agreement deals with the division of property (and if necessary, spousal maintenance) and that there is an intention to oust the jurisdiction.”
24. Cronin J at [68] found in Ruane (supra) that the words used in the recitals were part of the financial Agreement incorporated by “explicit indication that the parties had agreed on the purpose behind the formal rearrangement of their financial affairs and the exclusion of the jurisdiction of the Court.” Further that the purpose of the Agreement was to bring about a rearrangement of the parties’ assets on a permanent basis denying the parties an opportunity to proceed under the relevant adjustive provisions under the Family Law Act.
25. Similarly in the instant case, the Agreement on its face complies with the relevant statutory provisions under section 90UD of the FLA. It effectively brings about an ouster of jurisdiction pursuant to section 71A of the Family Law Act, the distinction between the recital and operative clauses being “a distinction without a difference.” It is submitted that the Court will find that the financial Agreement is valid, dismiss the application and make a declaration that the financial Agreement dated 15th July 2013 is binding.
In the alternative the financial Agreement be set aside pursuant to section 90UM (5) of the Family Law Act (Cth)
26. Pursuant to section 90UM of the Family Law Act:
Circumstances in which court may set aside a financial Agreement or termination Agreement
1) s.90UM (1) A court may make an order setting aside, for the purposes of this Act, a Part VIIIAB financial Agreement or a Part VIIIAB termination Agreement if, and only if, the court is satisfied that:
(a) the Agreement was obtained by fraud (including non-disclosure of a material matter); or
(b) …..
(c) ……
(d) ……
(e) the Agreement is void, voidable or unenforceable; or
(f) 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
(g) ….
(h) in respect of the making of a Part VIIIAB financial Agreement--a party to the Agreement engaged in conduct that was, in all the circumstances, unconscionable; or
(i) ………….
(j) …………….
(k) if the Agreement is a Part VIIIAB financial Agreement covered by section 90UE--subsection (5) applies.
(5) This subsection applies if:
(a) at least one of the spouse parties to the Agreement was not provided, before signing the Agreement, with independent legal advice from a legal practitioner about the effect of the Agreement on the rights of that party and about the advantages and disadvantages to that party of making the Agreement; or
(b) if this advice was provided to at least one of the spouse parties to the Agreement--that party was not provided with a signed statement by the legal practitioner stating that this advice was given to that party;
and it would be unjust and inequitable, having regard to the eligible agreed matters (within the meaning of section 90UE) for the Agreement, if the court does not set the Agreement aside.
(6) A court may, on an application by a person who was a party to the Part VIIIAB financial Agreement that has been set aside, or by any other interested person, make such order or orders (including an order for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of persons who were parties to that financial Agreement and any other interested persons.”
………..
27. It is not contended for by the applicant that subsection 90UM (1) of the FLA applies in the current proceedings. The applicant contends that:
(a) at least one of the spouse parties to the Agreement was not provided, before signing the Agreement, with independent legal advice from a legal practitioner about the effect of the Agreement on the rights of that party and about the advantages and disadvantages to that party of making the Agreement; or
(b) if this advice was provided to at least one of the spouse parties to the Agreement--that party was not provided with a signed statement by the legal practitioner stating that this advice was given to that party;
and it would be unjust and inequitable, having regard to the eligible agreed matters (within the meaning of section 90UE) for the Agreement, if the court does not set the Agreement aside.
28. With respect to the applicant’s contention that ss.90UM (5) (a) applies, this contention must fail. Clause 4 of the written Agreement provides that “the parties each state and warrant to the other party …that before this Agreement was signed by him or her, he or she was provided with independent legal advice from a legal practitioner on the following matters:
(a) The effect of the Agreement on the rights of that party; and
(b) The advantages and disadvantages at the time that the advice was provided, to the party making the Agreement.” Subsection 90UJ (1) (b) of the FLA was complied with and Clause 9 confirms the parties’ common intention to give full effect to the Agreement. Further the Agreement was executed by each party in the presence of each party’s legal representative as witness.
29. Similarly the applicant’s contention that ss90UM (5) (b) applies, must also fail. Annexed to the written Agreement is a statement by each legal practitioner representing each party confirming that he or she provided his or her client with “independent legal advice prior to entering into this Agreement. The relevant statements are attached to the written Agreement. The reference to “the parties” in each statement has no significance. It is clear from the statement, that each party was provided with a signed statement evidencing the fact that the other party had been advised as to the effect of the Agreement and the advantages and disadvantages at the time that the advice was provided to the party making the Agreement.
30. Foster J dealt with this issue in Collagio v Collins [2015] FamCA 263 at [53] to [60] noting that the statement of legal advice provided in that case referred to “(a) the effect of this Agreement on the rights of the parties.” His Honour said at [57] “The reference to ‘the parties’ as contended by counsel for the de facto husband reflected that the advice provided by each solicitor included the requisite advice to their own client but also advice as to the effect of the Agreement on the other party. Thus demonstrating a perhaps more expansive level of advice provided over and above the particular advice required to the individual client.” The Court determined that it would be unjust and inequitable if the Agreement were not binding on the parties to the Agreement and in accordance with section 90UJ (1B) made a declaration that the Agreement was so binding.
Accuracy of legal advice
31. In Wallace & Stelzer and Anor [2013] FamCAFC 199 (11 December 2013) a decision of the Full Court at [103] the Court dealt with the issue of the provision of legal advice as follows:
“[103] Although there appeared to be some suggestion in the husband’s case before us that in a case such as the present the court is required to consider the accuracy of the legal advice provided, we did not understand that issue to be ultimately pressed. But in any event we note that in the recent Full Court decision of Logan & Logan [2013] FamCAFC 151, and relying on Hoult, it was held that the only enquiry necessary is as to whether advice was given, and not as to the content of that advice.”
32. In Piper v Mueller [2015] FamCAFC 241 the Full Court dealt with the issue of provision of legal advice before signing a financial Agreement. The Court said at [41] “Once it has been found that the Agreement…was an Agreement entered into pursuant to section 90UC, 90UJ (1) (b) applied. That subsection requires each party to be provided with 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…the actual advice that was provided is the advice set out in Recital N. It is to be emphasized…that this submission is not concerned with the sufficiency or otherwise of the certificates annexed to the Agreement, it is concerned with the actual advice provided to the appellant.”
33. The Respondent relies on the advice provided by the Applicant’s legal representative as set out in clause 4 of the financial Agreement and the content of documents contained in the tender bundle including contemporaneous notes made by the Applicant’s solicitor evidencing the nature of the advice given. No complaint was made by the Applicant regarding the legal advice provided nor did the applicant seek to set aside the Agreement but rather to reduce the payment to be made to the respondent.
34. For the reasons set out above the applications should be dismissed and orders made in accordance with the orders sought by the Respondent.
In Royal Botanical Gardens and Domain Trust v South Sydney Council, the majority (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) said, at [10] (internal citations omitted):[59]
[10] In Codelfa, Mason J (with whose judgment Stephen J and Wilson J agreed) referred to authorities which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract:
“presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating”.
[59] Royal Botanical Gardens and Domain Trust v South Sydney Council (2002) 240 CLR 45.
Such statements exemplify the point made by Brennan J in his judgment in Codelfa:
“The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used.”
In both Pacific Carriers Ltd v BNP Paribas and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (“Toll”), the High Court emphasised the importance to ensure that “the meaning” of [commercial] contracts is to be determined “objectively.”[60]
[60] Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].
Then in Byrnes v Kendle, by reference to the earlier decision in Toll, the High Court said (Heydon and Crennan JJ), at [98] (internal citations omitted; emphasis added):
The approach taken to statutory construction is matched by that which is taken to contractual construction. Contractual construction depends on finding the meaning of the language of the contract – the intention which the parties expressed, not the subjective intentions which they may have had, but did not express. A contract means what a reasonable person having all the background knowledge of the “surrounding circumstances” available to the parties would have understood them to be using the language in the contract to mean. But evidence of pre-contractual negotiations between the parties is inadmissible for the purpose of drawing inferences about what the contract meant unless it demonstrates knowledge of “surrounding circumstances”. And in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd this Court said:
“It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe.”
The Applicant sought to rely upon the comments of the three Justices who refused a special leave application in Western Export Services Inc v Jireh International Pty Ltd (“Jireh”) (2011) 282 ALR 604. Unfortunately, he did not refer to the following particular paragraph in Jireh, where it was said, at [5] (internal citations omitted):[61]
We do not read anything said in this Court in Pacific Carriers Ltd v BNP Paribas; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd; Wilkie v Gordian Runoff Ltd and International Air Transport Association v Ansett Australia Holdings Ltd as operating inconsistently with what was said by Mason J in the passage in Codelfa to which we have referred.
[61] Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604.
Two further, and very recent, High Court decisions have essentially applied the principles set out in the earlier cases to which I have referred. I need not consider them.[62]
[62] See Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129 and Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640. See also the very helpful article by NSW Supreme Court Justice McDougall¸ “Construction of Contracts: the High Court’s approach,” (2016) 41 Australian Bar Review 103-119.
A number of things, indeed formal findings, flow from the application of the principles outlined here to the matters before the Court:
(a)The Recitals do form part of the Agreement which comprised two parts – the Recitals and the Covenants (on which more later);
(b)Viewed objectively, including that the parties initialled each page of the Agreement, including the Recitals, and given that the Applicant’s evidence at the hearing was that he did in fact read (albeit “scan read”) the Agreement, the words and conduct of the parties was intended to conclude a financial agreement that ordered their financial relationship;
(c)Also viewed objectively, the terms of (and the recitals to) the Agreement, intended also by necessary implication to oust the jurisdiction of the Court (see, for example, Recitals I and J: “[I] It is the parties’ intention by entering into this agreement they will avoid litigation in relation to the division of their property and financial resources and maintenance; [J] The parties intend the terms of this agreement to be given effect by any court having jurisdiction to determine financial matters (property and maintenance) between [the named parties] pursuant to the Family Law Act 1975”;
(d)Viewed “objectively”, Recital H refers specifically to the following intention of the parties: “In order to arrange their property affairs the parties have agreed to enter into this agreement under the provisions of s.90UD of the Family Law Act 1975 to deal with the division of their property, financial resources and maintenance”;
(e)Further, Recital K referred specifically to the only sum sought to be paid to the Respondent by the Applicant, being an amount that was the equivalent of a loan that was acknowledged to have been provided by the Respondent to the Applicant, namely the sum of $121,848.25. No other claim was made on the Applicant pursuant to the Agreement;
(f)And, Recital L provided for a series of acknowledgments by the parties in relation to (a) their knowledge of the other party’s assets, liabilities and financial resources, (b) the significant role played by the Respondent in the financial and taxation affairs of the Applicant, and (c) any questions or information either party sought or had had been satisfactorily answered prior to entering into the Agreement.
In my view, the argument that the Recitals are “extrinsic evidence” to which there can and should be no regard is untenable. On the basis of the High Court’s decisions to which I have referred, the decision of Cronin J in Ruane and its regular citation as authority, the Recitals were and are an integral part of the “objective” evidence to which the Court should properly have regard. They provide relevant insight, context and confirmation of the contractual intentions of the parties. If the Court were to rule that the Recitals were “extrinsic evidence”, it would inexorably lead to the virtually otiose question: what was their purpose, and why did the parties sign them, and do so at the same time, and finally, were the Recitals simply or merely surplusage? As explained by the Full Court in Wallace v Stelzer (discussed below), recitals play a significant role in financial agreements, including those entered into under the Act.
Having regard to the High Court’s comments in Toll (cited in Byrnes v Kendle), namely “What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe”, the words and actions of the parties in this matter must be taken to have intended to finalise their financial affairs in accordance with the Agreement dated 15th July 2013. That Agreement must be taken relevantly to include the detailed Recitals to it. To find otherwise would be legally and factually perverse as well as unrealistic. There is nothing inconsistent between the Recitals and the operative parts of the Agreement. In my view they form a unified and inseparable whole.
The Recitals were, at the time of signing in July 2013, an integral part of the Agreement. They remain so. They provided context and significant background to the operative part(s) of the Agreement. Indeed, the Recitals and the operative terms of the Agreement are akin to a diptych (δίπτύχος – diptychos), which classically referred to “something folded so as to have two leaves, especially an ancient winged writing tablet.”[63] Both “leaves” of the Agreement, the Recitals and the operative parts of it (the “covenants” or “covenantal terms”), were needed to understand and to reflect the agreement reached between the parties which, on the Applicant’s evidence, was something that had been the subject of discussion over a significant period of time. Part of those discussions, again on the Applicant’s evidence, included the clear understanding that the Respondent had of the Applicant’s assets and finances. There was no suggestion or submission made that the Applicant was ignorant of the Respondent’s assets and finances.
[63] Shorter Oxford English Dictionary (Fifth Edition, 2003); Liddell and Scott’s Intermediate Greek-English Lexicon, (Oxford: Clarendon Press, 1889) p.205.
Moreover, the Agreement, at clause 4, acknowledged that each party obtained independent legal advice in relation to the effect of the Agreement on the rights of each party, and the advantages and disadvantages to each of them at the time the advice was given.
On the logic of the Applicant’s argument to exclude the Recitals from the Agreement, and to which no relevant reference could or should be had, so too should the respective certificates, signed by each party’s solicitor, that are attached to the Agreement, be similarly excluded because they are not relevantly an “operative” part of the Agreement. This is patently not the case, and cannot be the case.
Further, I note the following from other relevant Full Court decisions, regrettably none of which were referred to by the Applicant.
First, in Sanger v Sanger, the Full Court referred to the role of recitals in the Agreement in that matter as making clear that the parties understood the risks they were accepting by entering into that Agreement.[64]
[64] Sanger v Sanger (2012) 46 Fam LR 275 at [69] – [71].
Secondly, in the same case (Sanger), the Full Court considered whether any post signing event(s) might otherwise make the Agreement “impractical” in its operation. Of course, no such argument was advanced by the Applicant in the present case. In any event, the Full Court said (at [86]) in relation to the relevant section of the Act there in issue (s.90K) that that section was “not designed to, and did not facilitate a party escaping from what proves, or is perceived to be a “bad bargain.”[65] The comments of the Full Court in Sanger have particular application here such that the Applicant, as he has sought to do via the current Application, cannot now seek to set aside the Agreement because of a change in his circumstances. He is bound by the Agreement which he had discussed at length with the Respondent prior to signing it.
[65] S.90K is in Part VIIIA of the Act. It relates to circumstances in which a Court may set aside a financial agreement. The equivalent section in Part VIIIAB of the Act is s.90UM which is formally “in play” in the current proceeding.
Thirdly, in Parker v Parker, at [109], Strickland J said: “In my view, s.90G(1A)(c) … contemplates the court looking at the nature of the noncompliance with s.90G(1), and determining whether, in the circumstances, it would be unjust and inequitable if the agreement was not binding on the parties due to failure to comply with a “technical” requirement.” The equivalent provision to s.90G(1A)(c) in Part VIIIAB of the Act is s.90UJ(1A)(c).
On appeal, the Full Court in Parker (Coleman J at [5] – [17]; Murphy J concurring on this point at [148] – [150]) held that s.90G(1A) (and obviously its cognate provision in s.90UJ(1A)) should be given a “remedial” or “beneficial” interpretation and otherwise be construed “generously”.[66] At [20], Coleman J said that a “narrow interpretation” would not promote the objectives of the legislation.
[66] Parker v Parker (2012) 260 FLR 284; (2013) 47 Fam LR 122.
In passing I note that the decision in Parker concerned the provision and adequacy of legal advice to one or both of the parties in relation to a financial agreement. Given that this was a significant issue in the matter before this Court (noted below), it is at least “curious” if not unfortunate that there was never any mention of this case (and others) in submissions on behalf of the Applicant.
To the degree that it is necessary to consider it, in my view any possible “technical” issues regarding the Agreement (e.g. as alleged by the Applicant, such as there being no reference in the operative parts of the Agreement to s.90UD of the Act), would otherwise be amenable to the remedial terms of s.90UJ(1A).
Indeed, in my view, having regard to (a) the authorities to which I have already referred, (b) the Full Court decisions in Wallace & Stelzer and Hoult (noted below, but also not raised in submissions), and (c) all the circumstances of the matter as outlined in these reasons, it would be fundamentally unjust and inequitable if the Agreement was not binding on both parties.
The Advice Argument
In relation to this aspect of the Applicant’s argument, it is important to set out some basal principles against which to measure the competing arguments advanced by the parties.
First, in Wallace & Stelzer, the Full Court (Finn, Strickland & Ryan JJ) said, at [101] – [103] (emphasis added):[67]
[101] The person who seeks to establish that a financial agreement is binding carries the onus of proof (Hoult & Hoult (2013) FLC ¶93-546. Applied to the facts in this case, this means that it fell to the wife to establish that the parties received legal advice in accordance with s 90G(1)(b). As a consequence of recital W and by tendering the signed agreement and the certificates, prima facie the wife was able to discharge her legal onus.
[102] However, once the husband put in issue whether the required legal advice had been provided, there was an onus on him to adduce evidence which would disprove or at least throw into doubt the inference or conclusion to be drawn from recital W and the certificates (being that legal advice had been given) (Hoult at [62] and [261]). Therefore, it was necessary for the parties to give evidence about the provision of advice, and evidence was also adduced from their respective solicitors.
[103] Although there appeared to be some suggestion in the husband’s case before us that in a case such as the present the court is required to consider the accuracy of the legal advice provided, we did not understand that issue to be ultimately pressed. But in any event we note that in the recent Full Court decision of Logan & Logan [2013] FamCAFC 151, and relying on Hoult, it was held that the only enquiry necessary is as to whether advice was given, and not as to the content of that advice.
[67] Wallace & Stelzer (2013) 283 FLR 126; (2013) FLC ¶93-566. See also the general discussion by the Full Court (Ryan, Murphy and Aldridge JJ) in Piper & Mueller (2015) FLC ¶93-686 regarding, inter alia, the sufficiency of the certificate. There was no mention or discussion of Piper & Mueller in submissions filed on behalf of the Applicant in the current matter; the Respondent’s submissions did refer to both of these Full Court decisions.
Secondly, in Hoult v Hoult, the Full Court (Thackray, Strickland and Ainslie-Wallace JJ) noted the following in relation to the issues of, inter alia, the burden of proof, the operation and effect of “the certificate”, and the discretion of the Court under s.90G(1A) (the correlative provision to s.90UJ(1A) in Part VIIIAB of the Act).
At [62], Thackray J said (Strickland and Ainslie-Wallace JJ agreeing):
… once the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate (especially when read with the recital in the agreement to the same effect).
At [96] - [98], his Honour said (emphasis added particularly in relation to the accepted use made of recitals):
[96] … I am unable to accept the view his Honour expressed at [88] that “the certificate is, without more, insufficient to satisfy the onus of establishing that the relevant s.90G requirements have been met”. The certificate, when read with Recital N, should have been treated as prima facie evidence of compliance with the legal advice component of s.90G(1).
[97] Put another way, employing Windeyer J’s formulation in Purkess v Crittenden (supra at 171), the production of the certificate, read together with the recital, should have given rise to “an inference, a presumption of fact or a presumptio hominis” that the requisite advice had been given.
[98] … the production of the certificate (especially when read with the recital) had caused the evidentiary burden to pass to the wife. The inference properly to be drawn from the certificate (read with the recital) is that the advice required by s.90G had been given, even though there was no evidence of the content of that advice….
Then in relation to the specifics of “advice”, Thackray J said, at [100] – [101] (emphasis added):
[100] … the trial Judge did not pose the correct question. He set out to ascertain the content of the legal advice, whereas he needed only to be satisfied that the advice referred to in s.90G(1)(b) had been given. Thus, when his Honour found that the certificate provided “an insufficient evidentiary foundation”, it seems his Honour was requiring the husband to provide a foundation for something that did not have to be proved.
[101] The certificate, read with the recital, provided a sufficient evidentiary foundation for finding there had been compliance with the requirements of the Act. The question whether that foundation had been undermined by other evidence became confused with the question of the precise content of the advice. It is possible, if the questions had not been confused, that the answer would have been the same, but it would be unsafe to make that assumption.
In a similar vein, at [279], the joint judgment of Strickland and Ainslie-Wallace JJ recorded that:[68]
It also must not be forgotten that, as Justice Thackray has correctly pointed out in paragraph 100 above, it was only necessary for the trial judge to be satisfied that the advice referred to in s 90G(1)(b) had been given, and the certificate can be a sufficient evidentiary foundation for that finding; it was unnecessary for the trial judge to ascertain the “content of the legal advice”, and that was the error his Honour made.
[68] At [288], their Honours also confirmed, by reference to the Full Court’s decision in Parker that s.90G(1A)(c) “is not confined to “technical” breaches.”
Against the background of these statements of principle by the Full Court (again I note that unfortunately they were not addressed in any submissions by the Applicant, accepting that there is a brief reference to the decision at first instance in Hoult in the Applicant’s primary submissions at footnote 12), I note the following matters summarily, having regard also to the consideration of the evidence earlier in these reasons.
As set out in his Supplementary Submissions, filed 6th July 2016 (par.8), the Applicant’s essential or primary position was that he was never advised, or never properly or adequately advised by his former solicitor in relation to the Agreement. He further contended that his evidence should be preferred to that of Mr Moore, including or notwithstanding the contents of Mr Moore’s file note dated 15th July 2013.
I have earlier recorded that I accept and prefer the evidence of Mr Moore to that of the Applicant. Among other things I consider Mr Moore’s evidence to have been candid (including when he did not recall a particular detail or details). He had the benefit of his relatively contemporaneous file note, which he confirmed provided a “summary” of the advice given to the Applicant prior to the signing of the Agreement. He also had, as he said, the confirmation of the certificate attached to the Agreement.
On the other hand, the Applicant had confirmed in writing his desire to re-visit the Agreement but raised this as an inquiry only after his expectations were not realised regarding the proceeds of sale of his property, Property E, and a lesser amount received from his insurance following a fire on the property. In his oral evidence, he was argumentative in answering questions, and often sought to tailor or customise his answers to provide the best possible response to questions put to him. While not untruthful, he was in my view, a less than reliable witness, and especially so compared to Mr Moore.
I accept Mr Moore’s evidence that his knowledge of the assets of the Applicant was necessarily dependent upon his long-standing association and professional relationship with the Applicant, which included having acted for the Applicant in relation to an earlier financial Agreement, in which the financial details of the Applicant were known. In this regard, the historical context and the understanding it gave to the Applicant and to Mr Moore is important. While historical context is no substitute for actual knowledge, it is nonetheless a critical piece of the evidentiary mosaic in the current matter.
I am satisfied that the “summary” of advice recorded in Mr Moore’s 2 page file note dated 15th July 2013, which referred to and reflected his more detailed oral advice provided to the Applicant on 15th July 2013, relevantly satisfied the requirements of the Act in relation to the provision of advice to the Applicant.
The Applicant made the following further contentions: the Applicant’s former solicitor’s [alleged] (a) failure to provide advice regarding “spousal maintenance”, and or (b) failure to provide advice regarding the advantages and disadvantages to both parties in entering into the Agreement (when the Act only stipulates that the advice relate to “that party”, not to both parties), and or (c) [related to (b)] the failure to have proper regard to the Respondent’s financial circumstances. In my view, these matters are (without more) (i) of a “technical” nature and therefore comprehended by the Full Court’s comments in Parker (in relation to the spousal maintenance issue), and (ii) not required under the Act (in relation to advice regarding the advantages and disadvantages of both parties, and in relation to considering the financial circumstances of the Respondent pursuant to s.90UJ(1)(b)).
Further, as earlier indicated, in addition to what has been said, to the extent that it is necessary to consider or to have regard to it, in my view the terms of s.90UJ(1A)(c) should be applied here. In all of the circumstances, not least the Court’s assessment of the opportunism of the Applicant in bringing the Application, the “technical” nature of any omissions or deficiencies in the Agreement and or advice in relation to it, it would be utterly unjust and inequitable if the Agreement were not to be binding on the parties. The Applicant has sought, long after the event, to renege on the Agreement he had struck with the Respondent, which was properly recorded in that Agreement. He did so only after there was a change in his financial circumstances. And prior to the filing of the Application, for some two years or thereabouts there was no issue raised by the Applicant in relation to the nature, quality or extent of the advice provided to him by his former solicitor.
It is apposite to return briefly to the Full Court’s decision in Wallace v Stelzer, notwithstanding that some remarks have already been cited from that decision. The comments by the Court in that case succinctly answer and rebut the contentions of the Applicant here.
First, at [101] – [103], the Full Court outlined the law and practice in relation to evidence to establish that a financial agreement is binding. There, their Honours stated:
[101] The person who seeks to establish that a financial agreement is binding carries the onus of proof (Hoult & Hoult (2013) FLC 93-546. Applied to the facts in this case, this means that it fell to the wife to establish that the parties received legal advice in accordance with s 90G(1)(b). As a consequence of recital W and by tendering the signed agreement and the certificates, prima facie the wife was able to discharge her legal onus.
[102] However, once the husband put in issue whether the required legal advice had been provided, there was an onus on him to adduce evidence which would disprove or at least throw into doubt the inference or conclusion to be drawn from recital W and the certificates (being that legal advice had been given) (Hoult at [62] and [261]). Therefore, it was necessary for the parties to give evidence about the provision of advice, and evidence was also adduced from their respective solicitors.
[103] Although there appeared to be some suggestion in the husband’s case before us that in a case such as the present the court is required to consider the accuracy of the legal advice provided, we did not understand that issue to be ultimately pressed. But in any event we note that in the recent Full Court decision of Logan & Logan [2013]FamCAFC 151, and relying on Hoult, it was held that the only enquiry necessary is as to whether advice was given, and not as to the content of that advice.
Thus so here: the Agreement was before the Court (annexed to the Applicant’s affidavit). The Agreement had annexed to it, the relevant certificate that attested to the relevant advice. With that certificate, and the recitals that referred to the provision of advice to the parties, the onus then shifted to the Applicant to provide evidence that would relevantly throw doubt on the prima facie provision of independent legal advice.
Secondly, at [108], the Full said:[69]
… the trial judge examined the evidence of the husband’s dealings with his solicitor in relation to the agreement before it was signed, and it was the totality of their dealings and not merely the occasion upon which the agreement was signed, that underpinned his Honour’s findings ([59]-[64]). There is no proper basis upon which we could interfere with his Honour’s findings about what passed between the husband and the solicitor.
[69] See also the comments by the Full Court at [107] regarding findings by the trial Judge regarding the provision of “general and specific advice”, that it was considered “wise” to enter the agreement, and that there were “advantages” to him. Similar but even more detailed advice was given by Mr Moore to the Applicant her.
Just so here: it is not only the detail of Mr Moore’s file note (and the certificate and recital to the Agreement), coupled with his oral evidence at trial regarding the history of his dealings with the Applicant (which was not disputed by the Applicant) which supports the conclusion/finding that the relevant advice was given to the Applicant. It was clearly the case that it was “the totality of their dealings [i.e. the dealings between Mr Moore and Mr Warner] and not merely the occasion upon which the agreement was signed” that gives even greater credence to Mr Moore’s evidence regarding the provision of legal advice to the Applicant.
Thirdly, at [109] - [110], the Full Court said (emphasis added):
[109] It was however submitted by the husband that when his Honour took into account that the husband signed recital W, he erred. This challenge is made on the basis that recital W is no more than an admission by a lay person about matters of mixed fact and law. It follows, that such an admission could not provide the basis for a finding by the court (Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317).
[110] The words used in recital W do not require the application of a standard fixed by law in order to gain meaning. In our view, they constitute an admission as to a matter of fact, the fact being the provision of legal advice in the manner and of the type described. It follows that the words used in recital W constituted admissible evidence against the husband (and the wife) of the truth of the matters there stated. As a consequence, his Honour was entitled to take into account, in the manner he did, the terms of recital W in forming his view that the husband (and the wife) had been provided with the advice referred to therein.
Respectfully, had proper attention been given to this Full Court decision in Wallace v Stelzer (and other similar authorities) at an earlier point in time, I suggest that many if not most of the difficulties presented to the Court would have been avoided.
For the reasons I have given it is unnecessary to address any other argument advanced by the Applicant, save that I accept and otherwise adopt the submissions on behalf of the Respondent in relation to each of the matters raised and contentions made by the Applicant.
Recital K to the Agreement is in the following terms:
During the course of the relationship, Ms Cummings [Cummings] loaned $121,848.25 to Mr Warner [Warner]. Annexure B to this agreement details the dates on which sums were loaned to reach this total. The money was used by Mr Warner for operating expenses in his business at “Property E.”
The Applicant had acknowledged receipt of the funds lent to him by the Respondent for his business. The Annexure to the Agreement records that these funds were lent over a significant period of time. Clearly the Applicant had the benefit of those funds. He should not now be permitted to renege on his agreement, long-discussed, with the Respondent as recorded in the Agreement dated 15th July 2013. He had (or ate) his cake, so to speak, over a number of years in the benefits from the use of the funds provided by the Respondent. He cannot [now] still have that cake by denying and otherwise disowning his responsibility to pay what he had agreed to make to the Respondent. The day of “accounting” for the loan, reflected in the Agreement, has now come; it must be honoured by the Applicant.
For the reasons outlined here the declaration and Orders sought by the Respondent should be made, together with the Order in relation to costs earlier indicated.
I certify that the preceding one hundred and thirty-six (136) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 10 March 2017
23
2