Warrick and Mia
[2018] FamCA 426
•12 June 2018
FAMILY COURT OF AUSTRALIA
| WARRICK & MIA | [2018] FamCA 426 |
| FAMILY LAW – PROPERTY SETTLEMENT – Binding Financial Agreement – Where the parties entered into a binding financial agreement under s 90C of the Family Law Act 1975 (Cth) in 2007 – Where the binding financial agreement specifies that “in the event of a breakdown of the marriage assets and personal effect which are held in both parties names acquired after the marriage shall be property of both parties and should be divided between the parties on a contribution basis” – Where the binding financial agreement does not define “contribution basis” – Where the wife submits that in order to give effect to the parties’ intentions at the time the agreement was made the wording of the agreement should be changed to reflect a division based on direct financial contributions – Where even if the proposed amendment was allowed, the Court is not satisfied that the resultant meaning would be unambiguous – Consideration of Kostres & Kostres (2009) FLC 93-420 – Where the binding financial agreement is unclear and therefore is unenforceable – Where of the Court’s own motion the binding financial agreement must be set aside. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 90C, 90G, 90KA Judiciary Act 1903 (Cth) ss 31, 32 |
| Calverley v Green (1984) 155 CLR 242 Hoult & Hoult (2011) FLC 93-489 Kostres & Kostres (2009) FLC 93-420 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Twigg and Twigg v Kung (1994) FLC 92-456 |
| APPLICANT: | Mr Warrick |
| RESPONDENT: | Ms Mia |
| FILE NUMBER: | PAC | 845 | of | 2017 |
| DATE DELIVERED: | 12 June 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 3 and 4 May 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Adam |
| SOLICITOR FOR THE APPLICANT: | Just In Case Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Todd |
| SOLICITOR FOR THE RESPONDENT: | Bloomsbury Legal |
Orders
The agreement between the parties titled “Financial Agreement During Marriage” dated 27 July 2007 is set aside.
The proceedings are adjourned to a dated to be fixed by the Registry for directions in respect of financial proceedings.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Warrick & Mia has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 845 of 2017
| Mr Warrick |
Applicant
And
| Ms Mia |
Respondent
REASONS FOR JUDGMENT
introduction
Mr Warrick and Ms Mia were married in 2007. Although they are now divorced, for convenience I will refer to them as “the husband” and “the wife” respectively. Shortly after the marriage took place, in 2007 they executed an agreement entitled: “Financial Agreement During Marriage” (“the 2007 agreement”) which addressed their financial arrangements in the event of the breakdown of their marriage. Among other things the agreement addressed the treatment of their property and precluded any claim for spousal maintenance.
The parties agree that the 2007 agreement is a binding financial agreement for the purposes of the Family Law Act 1975 (Cth) (“the Act”). However, they disagree about the meaning of some of its terms and whether or how it should be enforced. The key provision of the agreement for the purposes of these proceedings is one that provides that, in the event of breakdown of the marriage, jointly owned property acquired by the parties during the marriage should be divided between them on a “contribution basis”.
The substantive proceedings between the parties include orders sought by the husband for property settlement and spousal maintenance and orders sought by the wife for enforcement of the 2007 agreement. There are also related proceedings commenced by the wife for the removal of a caveat which have been transferred to this Court from the NSW Supreme Court. In the context of those substantive proceedings, the matter was listed for “the enforcement of clause 3(d) of the 2007 agreement necessitating an assessment by the court as to the contribution of each of the parties to the assets and personal effects which are held in both parties’ names acquired after the marriage”.
In my view the 2007 agreement is unclear and therefore is unenforceable. Of the Court’s own motion it must be set aside. These are the reasons for that decision.
Applications
The husband’s summary of argument is different to the terms of his most recently filed Initiating Application. According to his Initiating Application filed 20 March 2018, the husband seeks the following orders:
1.Pursuant to s90K(1)(B) of the Family Law Act 1975, a Declaration that the agreement dated 27 July 2007 (“the Agreement”) is void, voidable or unenforceable by reason of uncertainty. Consequently the jurisdiction of the Court under Part VIII of the Act is not ousted.
If the Agreement is not set aside or not declared void, voidable or unenforceable, then
2.Declaration that the property rights of the parties are governed by the terms of the agreement dated 27 July 2007 (“the Agreement”), and pursuant to s 90KA are to be determined according to the principles of law and equity.
3.Declaration that the term “contribution” in clause 3(1)(d)of the agreement has the same meaning it has under s 79(4) of the Family Law Act 1975.
4.Declaration that the parties made equal contributions for the purposes of clause 3(1)(d).
5.Declaration pursuant to s 90K(1)(a) & (e),and the principles of law and equity, that the agreement underlying the transfer of the Applicant’s interest in the property to the Respondent, was affected by fraud and the unconscionable conduct of the Respondent and is liable to be set aside.
6.Declaration pursuant to s 90KA that the Respondent holds the Applicant’s interest in the property on trust.
7.Orders pursuant to s 90K(3) transferring the Applicant’s interest in the property to the Applicant, with the effect that the property remained in the joint names of the parties for the purposes of clause 3(1)(d).
8.Order pursuant to s 90KA(c) for the enforcement.
The wife sought orders in terms of her Amended Response to Initiating Application filed 9 October 2017 as follows:
1.Order that the Initiating Application filed 19 September 2017 by the applicant husband be dismissed.
2.Order that the applicant husband pay the wife’s costs of and incidental to the proceedings.
3.Order that pursuant to Clause 3(1)(d) of the binding financial agreement dated 27 July 2007 (“2007 Agreement”), the respondent wife pays to the applicant husband the contribution to the property situated at [D Street, Suburb M] NSW (“[Suburb M] Property), in the total sum of $150,000.00 as agreed by the parties on 5 February 2014, by payment of the balance of such money outstanding in the sum of $60,000.00 in two annual instalments by 5 February 2019.
4.Alternatively to Order 3, order that the respondent wife pays to the applicant husband the financial contribution by the applicant husband to the acquisition of the [Suburb M] Property, by payment to the applicant husband such amount, if any, as is found to be due and payable by the Court.
5.In the further alternative to Order 3 and 4, order that the respondent wife pays to the applicant husband the sum of $150,000.00 representing the financial contribution of the applicant husband pursuant to the said 2007 Agreement less the sum of $90,000.00 paid to the applicant husband by the respondent wife since 5 February 2014, being an outstanding balance of $60,000.00 in two annual instalments by 5 February 2019.
6.Order that Caveat …90 be removed from the title of the [Suburb M] Property by the applicant husband within 72 hours and a copy of such lodged Withdrawal of Caveat, as filed, be forwarded to Bloomsbury Legal as solicitor for the respondent wife.
7.Declaration that as the dates of:
a.The binding financial agreement between the parties on 27 July 2007; and
b.The subsequent agreement between the parties dated 5 February 2014.
The applicant husband was not a person entitled to receive means tested pension within the meaning of Section 90F(1A) of the Family Law Act 1975.
Documents Read
The parties relied on the following documents:
Documents relied on by the husband:
·affidavit of the husband filed 30 October 2017;
·affidavit of Mr Q filed 2 May 2018;
·Financial Statement of the husband filed 28 February 2017; and
·Initiating Application filed 20 March 2018.
Documents relied on by the wife:
·affidavit of the wife filed 10 November 2017;
·affidavit of Ms J filed 1 May 2018;
·affidavit of Luming Wang filed 21 March 2018;
·affidavit of Ms T filed 27 April 2018;
·Financial Statement of the wife filed 16 May 2017; and
·Amended Response to Initiating Application filed 9 October 2007.
The Hearing
On 18 July 2017, Foster J made trial directions and recorded the following matters:
…
2.The Court is informed today as follows:
(i)That the husband concedes that the agreement dated 27 July 2017 [sic] between the parties is a binding financial agreement for the purposes of the Act.
(ii)That the parties concede that the agreement between the parties dated 5 February 2014 is not a binding financial agreement for the purposes of the Act.
(iii)That the issue for determination is the enforcement of clause 3(d) of the 2007 agreement necessitating an assessment by the Court as to contribution of each of the parties to assets and personal effects which are held in both parties’ names acquired after the marriage.
The case was subsequently listed for hearing in respect of the issue identified on 18 July 2017, over two days. The dates of 3 and 4 May 2018 were later allocated.
When the matter was called on 3 May 2018, the parties were both present and represented by counsel and solicitors. The parties’ counsel had earlier joined issue in relation to objections to evidence. The remaining issues arising from objections were addressed. Although the parties were granted leave to give oral evidence about some matters excluded from their affidavits on objection, it was agreed that the limited issue fixed for hearing could be addressed on the basis of submissions alone and without oral evidence. At the request of the parties the matter was adjourned to 4 May 2018 for submissions. On 4 May 2018 written submissions were tendered and were briefly spoken to by the parties’ counsel. Thereafter, judgment was reserved and the parties were excused from attending on delivery of judgment.
Short History
The husband was born in 1948 and at the time of the hearing he was 69 years of age. The wife was born in 1961 and she was 57 years of age.
The parties met in 2006, were married in 2007 and were divorced in 2016. There is a dispute about their date of separation. I assume that matter was resolved in the divorce proceedings but I was not asked to make a finding about this issue. On 27 July 2007 the parties signed a financial agreement entitled “Financial Agreement During Marriage”.
Children
There are no children of the marriage.
The husband has three children from his previous marriage. The wife has one child from her previous marriage.
Background Facts
The arguments about the 2007 agreement were presented prior to any oral evidence. The following facts arise from the parties’ affidavits but some of them may yet be the subject of challenge.
The parties met in 2006. At the time the parties met the wife owned a company in China and the husband was working in the transport industry.
The parties were married in 2007.
On 27 July 2007 the parties signed the 2007 agreement. Relevant parts of the 2007 agreement are as follows (errors in the original):
RECTIALS
1.The parties got married at Sydney Australia on […] 2007.
2.[Ms Mia] is 46 years of age, being born on … 1961, and [Mr Warrick] is 59 years of age, being born on … 1948.
3.[Ms Mia] has one child from a former marriage, [Mr O] born on … 1989 (called “[O]”).
4.[Mr Warrick] has three children from a former marriage, [Mr X] born on … 1969, [Mr Y] born on … 1971, and [Mr Z] born on … 1972.
4.[Mr Warrick] is citizen of Australia and [Ms Mia] is a citizen of China at the time of the entry into this Agreement.
It is acknowledged by the parties mutually that
5.Parties acknowledge that [Ms Mia] has real properties, shares and interests in a company and other assets in City B China and [Mr Warrick] has superannuation, bank savings and other assets. A list of current Assets of both parties at the time of signing this agreement is annexed to Schedule A of this agreement.
6.The values attributed to property listed in Schedule A are estimates and current value as at the Date of Deed.
7.In the event of a breakdown of their marriage, the parties agree to amicably settle and divide their matrimonial property to avoid any expense, delay and bitterness arising from litigation as set down in this agreement.
…..
NOW THIS DEED WITNESSES:
1.EFFECTIVE DATE OF THIS AGREEMENT
This Agreement will take effect only on the date of execution of this Agreement by the parties.
2.THE PROPERTY
The Assets of each party shall remain the property of each party during the marriage. The parties will at all time have the full right and authority to deal with the Assets under each party’s name as if not married.
3.ON SEPARATION OR DIVORCE
(1)Upon the breakdown of their marriage and notwithstanding any unequal financial or non financial contributions by both parties to their matrimonial properties, both parties agree that subject to the above provisions of this agreement:
(a)The assets and liabilities of the each party before the marriage shall be the absolute property of each party and shall not be included into the pool of matrimonial property during any property division between the parties.
(b)Other than as referred to in this agreement, the parties shall retain to the exclusion of the other, the items of property, savings, superannuation entitlements, motor vehicles, furnishings, furniture and household contents under the party’s name.
(c)Each party shall retain their own personal belongings and clothes and furniture.
(d)The assets and personal effect which are held in both parties names acquired after the marriage shall be property of both parties and should be divided between the parties on a contribution basis.
(e)The assets and liabilities which are held in each party’s name after the marriage shall be the absolute property of each party. These assets shall not be included into the pool of matrimonial property during any property division between the parties.
(2)….
4.Maintenance
In consideration of the parties entering into this financial agreement, the parties agree in the event of the breakdown of the marriage either during the course of the marriage or after the dissolution of the marriage that,
(f)Each of the parties will release the other from any spouse maintenance claim;
(g)Each of the parties will contribute to maintenance of the other is NIL.
(h)This is the clause to which the provision of S90E of the Act should apply.
5.Family Provision Act 1982 (NSW)
…..
6.RIGHT TO CONTEST
…..
7.INTEGRATION
…..
8.SEVERABILITY
The provisions of this agreement are severable. The invalidity or unenforceability of any provision(s) of this agreement will not affect the validity or enforceability of the remaining provisions of this agreement. If any provision is deemed invalid due to its scope or breadth, such provision will be deemed valid to the extent of the scope and breadth permitted by law.
9.CONTINUING AGREEMENT
…..
10.MODIFICATION
This agreement can be later modified, superseded, or voided only upon the written agreement of both parties. Further, the physical destruction or loss of this agreement will not be construed as a modification.
11.ACKNOWLEDGEMENTS
…..
12.GOVERNING LAWS
This Agreement is valid and enforceable under Australian laws. Both parties irrevocably agree to submit to the non-exclusive jurisdiction of the courts in Australia, and to waive any objections on the ground of venue or forum non conveniens or any similar grounds
13.Binding on Successors.
…..
Schedule A
Assets under [Ms Mia’s] name at the commencement of marriage:
1.Property at [City B address omitted] and its attachments; present value RMB Ұ4,080,000.
2.Property at [City B address omitted] and its attachments; present value RMB Ұ900,000.
3.Property at [City B address omitted] and its attachments; present value RMB Ұ900,000.
4.Shares and interests owned from [E] Pty Ltd including 90% shares and interests as the sole director and legal person of the company; present value RMB Ұ2,000,000.
5.Bank money $80,000 at St George Bank Australia.
6.Bank money RMB Ұ350,000 at [C] Bank of China.
7.Bank money RMB Ұ100,000 at [G] Bank of China.
Assets under [Mr Warrick’s] name at the commencement of marriage:
1. Superannuation $650,000.00.
It is common ground that the 2007 agreement is a binding financial agreement.
In 2007 the parties purchased a property at D Street, Suburb M NSW (“the Suburb M property”) for $535,000. The wife paid the deposit and stamp duty totalling about $130,000. A mortgage was obtained by the parties from Westpac Bank Corporation for $428,000.
In 2007 the parties opened a joint account at St George Bank with account number …22 (“the joint account”). The wife contends that between 14 September 2007 and 14 February 2014 the husband transferred about $250,000 into the joint account.
The wife made various credit card payments throughout the marriage.
Following settlement of the Suburb M property in August or September 2007 the parties moved into the property.
At the end of 2008 the wife started to work, receiving an average income of $300 per week.
In March 2009 the wife enrolled in a TAFE owner-builder course and obtained an owner-builder licence.
In early 2010 the parties began construction at the Suburb M property of a shed that would later become a granny flat (“the granny flat”).
It is the wife’s case that the parties separated on 31 January 2013.
In 2013 the husband withdrew $30,000 from his superannuation.
In August 2013 the husband’s right hand began to shake. He attributed it to an injury he suffered at work. The husband was later diagnosed with a condition.
The husband won $100,000 in a lottery. The husband asserts that the win occurred in 2014. The wife states that the winning lottery ticket was purchased in 2012.
On 2 February 2014 the parties each signed a separation declaration asserting that their separation took place on 31 January 2013.
On 5 February 2014 the parties signed a document labelled “Property Settlement Agreement Pursuant to Financial Agreement dated 27 July 2007” (“the 2014 agreement”). The husband contends that he did not receive independent legal advice prior to signing this document. Part two of that agreement is to the following effect:
2.Property Division:
[the wife] shall pay [the husband] $150,000.00 within 5 years from the date of this agreement. The parties agree the following payment options will be adopted: (a) minimum amount- $30,000.00 per annum for 5 years, or (b) any larger amount than the minimum amount per year until $150,000.00 is paid off. The parties will arrangement [sic] for the payment date for each payment. [The wife] shall make payment to [the husband] by Electronic Transfer or any other payment methods as agreed by the parties, however [the husband] shall sign acknowledgement of receiving payment after receive [sic] payment from [the wife].
[The husband] shall transfer his shares in the property at [D Street, Suburb M NSW] to [the wife] within 30 days from the date of this agreement. [The husband] shall sign any documents and do necessary things to enable the transfer.
[The wife] shall obtain her own finance to discharge the current mortgage with Westpac.
It is common ground that the 2014 agreement is not a binding financial agreement.
Soon after the 2014 agreement was signed, the wife gave the husband $60,000. The wife then discharged the mortgage of $417,485.38 on the Suburb M property using funds received from her mother and both parties executed the transfer of the property to the wife’s sole name.
In February or March 2014 the husband retired and began collecting the age pension.
On 26 February 2014 the wife commenced an English Course at a TAFE college.
From August 2014 to May 2016 the wife received approximately $800 or $900 per fortnight by way of a carer’s pension for taking care of the husband.
In late 2014 the husband moved into the granny flat. While in the granny flat the husband continued to contribute up to $300 per fortnight. The wife contends that the husband’s payment was for board/rent. The husband contends that it was towards his share of the household expenses.
In December 2014 the wife ceased working.
In the husband’s Initiating Applications filed 19 September 2017 and 20 March 2018 he states that the parties separated on 1 February 2015.
In December 2015 the parties received a notice of determination of development application stating that the granny flat did not accord with the requirements of s 79C of the Environmental Planning and Assessment Act 1979 (NSW).
In April 2016 the husband caused a caveat to be registered on the title of the Suburb M property.
In 2016 the parties were divorced.
In November 2016 the husband had a fall in the granny flat. He was unable to contact the wife and was on the floor for two days. He was then taken to hospital by ambulance where he stayed for over two weeks. The hospital subsequently sent him to a nursing home in Town K.
On 28 November 2016 the wife paid the husband $24,000. She claims that this constituted a payment of $30,000 that was reduced by $6,000 for rental arrears owed by the husband for his occupation of the granny flat.
On 28 February 2017 the husband commenced these proceedings.
In April 2017 the wife commenced proceedings in the NSW Supreme Court for the removal of the caveat registered on the title of the Suburb M property by the husband. On 18 May 2017 those proceedings were transferred to this Court, to be heard with the family law matter.
Issues
The preliminary issue for determination is whether the 2007 agreement can be enforced.
Submissions
The written submissions on behalf of the wife were as follows:
1.Pursuant to Note 2(i) of Foster J on 18 July 2017 the husband conceded the 27 July 2007 agreement between the parties is a BFA and further that the essential issue for determination between the parties relates to the enforcement of clause 3(1)(d) of the BFA:-
“(d)The assets and personal effect (sic) which are held in both parties’ names acquired after the marriage shall be property of both parties and should be divided between the parties on a contribution basis” (emphasis added).
2.The salient features of the deed that assist in the clause 3(i)(d) construction are:-
(i)Pursuant to Recital 5 (schedules) that the respondent had significant real property in China and funds, the husband contended only a contingent superannuation interest.
(ii)Pursuant to Recital 7:-
“In the event of breakdown of the marriage, the parties agree to amicably settle and divide their matrimonial property to avoid expense, delay and bitterness arising from litigation as set down in this agreement.”
(iii)Pursuant to Recital 9, the BFA was pursuant to s.90C Family Law Act.
(iv)Clause 3(1) of the BFA the parties agreed that, “Upon the breakdown of their marriage and notwithstanding any unequal financial or non-financial contributions by both parties to their matrimonial property both parties agree, that subject to the provisions of this agreement:-
(a)(Each party retained premarital assets.–non contentious)
(b)(The parties retained solely owned personalty–non contentious)
(c)(Each party retained personal effects including furniture–non contentious).
(d)“The assets and personal effect (sic) which are held in both parties’ names acquired after the marriage shall be property of both parties and should be divided between the parties on a contribution basis”
(e)Assets and liabilities in the sole name of the party after acquired shall remain the absolute property of that party.
3.The Deed became operative upon the breakdown of the marriage, namely the parties executing the separation declaration as to separation 31 January 2013.
4.The general intention of the parties in entering the deed is clearly governed by recital 7, which binds the parties, in providing a mode to settle and divide their matrimonial property avoiding expense, delay and litigation as set out in the BFA. In achieving that object or purpose, the parties should be limited to financial contributions for the purpose of subclause 3(1)(d) as, to do otherwise, would require conjecture, bitterness and likely dispute as to non-financial or other contributions or entitlements leading to litigation which Recital 7 governs.
5. Further, the non financial matters and s.75(2) matters should be excluded in their entirety, by specific exclusion in cl.3(1) preamble”.. notwithstanding any unequal financial or non-financial contributions…” The non financial matters and s.75(2) matters could not sensibly constitute a “contribution”, but rather constitute “circumstances”.
6.Limiting cl.3(1)(d) contribution to direct financial contribution is logical when reading the Deed as a whole. The intention of BFA’s pursuant to Part VIIIA is to provide the parties with a fast and efficacious mode to resolve property division on marital breakdown without litigation, such being the statutory object of Part VIII A pursuant to the Family Law Amendment Act 2000 that the parties could make binding financial agreements governing the financial adjustment consequences of separation, with those Agreements being effective to oust the court’s jurisdiction, subject to certain specified conditions: s.71A.
7.There is no statutory definition in s.4 Family Law Act, and s.79, an artificial and expanded deeming provision as to contribution, but that section and Part VIII, is ousted by a valid Part VIIIA BFA.
8.The fundamental rule for interpretation for deeds is the “expressed intention of the parties must be discovered” (Norton on Deeds, 1928, p 50), but here the further important rule of construction is that: words capable of more than one construction are construed so as to carry into effect the expressed general intention of the parties; and if owing to some rule of law a deed failed to take effect in the manner expressed it will, if possible, be construed so as to carry into effect the expressed general intention of the parties (Norton 53-54).
9.In the construction of Deeds is that one looks to the “literal meaning” and thus, when the words used in a Deed in their literal meaning are unambiguous, and when such meaning is not excluded by the context, and is sensible with respect to the circumstances of the parties at the time of executing the deed, such literal meaning must be taken to be that in which the parties used the words (Norton 83-84), which constitutes the so-called golden rule of interpretation. See Beard-v-Moira Colliery Co 1915 1 Ch. 257 at 268 “in the construction of deeds, ordinary words ought to be given their plain and ordinary meaning”.
The phrase “contribution basis” admits only the clear unambiguous import of intending to mean financial contribution contributed to that joint after acquired asset.
10.In light of the above, it is only sensible and expedient that the construction of the phrase “…should be divided between the parties on a contribution basis” be referable to a direct financial contribution by such parties. It is impossible to envisage how the relevant phrase could be expanded to include contribution on a non-financial direct or indirect contribution as apparently contended by the applicant. Such could not have been the general or specific intention of the parties in entering the BFA.
11.The direct financial contribution to an after acquired joint asset of the parties is the only practical solution intended by the parties and the deed.
The written submissions on behalf of the husband were as follows (errors in the original):
1.An issue between the parties has arisen as to the construction of the expression “on a contribution basis” at clause 3(1)(d) of the parties’ Financial Agreement dated 28 July 2007.
2.The Applicant contends for a broad reading, including non-financial contributions, whilst the Respondent contends for a narrow reading limited to direct financial contributions.
3.The document contained the agreement is variously expressed to be a “Deed”, “Executed as a Deed” and “Signed Sealed and Delivered”.
4.In Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at [9]-[10], the High Court constituted by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ considered that the rules that apply to the interpretation of deeds are the same as apply to the interpretation of contracts. That is the intention of the parties must be ascertained: Dobson v Beath Schiess & Co (1905) 2 CLR 277 at 283 (Griffith CJ), at 287 (O’Connor J).
5.Pursuant to s 90K(1)(b) of the Family Law Act 1975, a Court may make an order setting aside a financial agreement if the Court is satisfied that the agreement is void, voidable or unenforceable.
6.In Weiss, MM v Barker Gosling (1993) FLC 92-399, Fogarty J (at page 80,080) stated:
As to the test of uncertainty, a convenient point of reference is Cheshire v Fifoot’s Law of Contract, 6th ed at p.97 et seq. It is stated there that a contract will be void for uncertainty only if its essential terms are uncertain or incomplete, unless the uncertain part can be severed, that is it is not essential, leaving the balance of the agreement intact. In determining what is essential and what is inessential, one looks to the intention of the parties. In cases where an essential term of the contract is alleged to be uncertain, such uncertainty may be because either the agreement is incomplete or because it is unclear.
7.It is the Applicant’s contention that clause 3(1)(d) is an essential term, that cannot be severed, and when assessed objectively, the language is so imprecise and incapable of definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention in relation to it.
8.Clause 3(1) of the financial agreement provides:
Upon the breakdown of their marriage and notwithstanding any unequal financial or non-financial contributions by both parties to their matrimonial properties, both parties agree…
…
(d)
The assets and personal effects which are held in both parties names acquired after the marriage shall be the property of both parties and should be divided between the parties on a contribution basis.
9.It is important to note that the word “contribution” is used in conjunction with the word “basis”. In this sense, contribution is being used either as an adjective or as a compound word. The linking of “contribution” to “basis” creates further uncertainty about its possible meanings. “On a contribution basis” suggests plurality. The Concise Oxford Dictionary, 1964 defines ‘basis’ as the plural of base.
10.The intended contributions were to be towards their “matrimonial properties” (plural), but this essential term is not defined. The meaning(s) of “matrimonial properties” is the key to the construction of “on a contribution basis”. Unless the term “matrimonial properties” is defined, there can be no understanding of what “on a contribution basis” means.
11.In Gibbs v Gibbs [2017] FamCA 7 (17 January 2017), Carew J set aside a financial agreement in circumstances where the term ‘matrimonial property’ was undefined.
12.It has often been said that the Courts should give a commercial contract a business-like interpretation: McCann v Switzerland Insurance Australia Ltd (2000) 2013 CLR 579, Gleeson CJ at [22].
13.It flouts business commonsense that the parties should have intended “on a contribution basis” not to include non-financial contributions to the improvement of property, the traditional investment of parties to a marriage.
14.Another uncertainty or incompleteness in the agreement is that it is silent on the question of the parties’ accounting as between themselves for disparities in their mortgage repayments. The agreement only refers to contributions to matrimonial property.
15.This will cause further confusion in the accounting between the parties. Mason and Brennan JJ’s reasoning in Calverley v Green (1984) 155 CLR 242 (at 258) is that contributions to mortgage repayments are not contributions to the purchase price of property.
16.Clause 3(1) identifies a class of potential contributions, that includes both financial and non-financial contributions. Under the principle of ejusdem generis the subsequent reference “on a contribution basis” invites a reading in line with the earlier identified class, including non-financial contributions.
17.The Recital offers no overarching interpretative purpose for the agreement, other than the forlorn hope of avoiding future litigation without identifying how that might be achieved.
18. Finally, there is no basis to exclude non-financial contributions. Had the parties intended otherwise, the simple stroke of a pen could have made this clear.
19.While it may not be pertinent to the construction of their agreement, certainly the parties have conducted their litigation on the basis that matters such as contributions to the household and improvements to the property were the vital matter of the proceedings and have filled five lever-arch folders full of court book.
20.The Full Court of the Family Court in Kostres v Kostres [2009] FAMCAFC 222 considered the following relevant to the interpretation of financial agreements:
[128] We accept that in determining whether the agreement is valid, enforceable or effective, the general law relating to contracts, as well as principles of equity, are to be applied. That must be done to give effect to the parties’ intentions at the time of the making of the agreement, and in the context of the statute. The legislature has been careful to include strict requirements if a financial agreement is to be binding, including the requirement of independent legal advice. In those circumstances it is clear the legislature envisaged, because of the nature of these agreements and the removal of the Court’s supervisory role, that parties would receive legal advice about the necessity for their intentions to be accurately and clearly reflected in the actual terms of the agreement.
[129] While, for the purpose of construing the agreement a court should, as in the context of a commercial agreement, apply an objective test of a reasonable bystander to the construction of an agreement, it cannot give meaning to an agreement whose terms are so imprecise or ambiguous the parties’ intent cannot be discerned. This is particularly so when regard is had to provisions of Part VIIIA in the overall context of the Act.
21.In the present case, the parties were independently advised of the matters required under s 90G. The certificates of their legal representatives are in evidence.
22.The terms of agreement are uncertain or incomplete. In concert with the approach of the Full Court in Kostres, it is not for the Court to rewrite their agreement for them.
23.Furthermore, the Deed was prepared by the Solicitors for the Respondent and any ambiguity should be read contra proferentum.
The law in relation to binding financial agreements made during the marriage
Section 90C of the Act sets out when an agreement is a financial agreement during the marriage:
(1) If:
(a)the parties to a marriage make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa)at the time of the making of the agreement, the parties to the marriage are not the spouse parties to any other binding agreement (whether made under this section or section 90B or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement . The parties to the marriage may make the financial agreement with one or more other people.
(2) The matters referred to in paragraph (1)(a) are the following:
(a)how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time and during the marriage, is to be dealt with;
(b) the maintenance of either of the spouse parties:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
(2A)For the avoidance of doubt, a financial agreement under this section may be made before or after the marriage has broken down.
(3)A financial agreement made as mentioned in subsection (1) may also contain:
(a)matters incidental or ancillary to those mentioned in subsection (2); and
(b) other matters.
(4)A financial agreement (the new agreement) made as mentioned in subsection (1) may terminate a previous financial agreement (however made) if all of the parties to the previous agreement are parties to the new agreement.
Section 90G of the Act specifies when financial agreements are binding as follows:
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a court.
Note:For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.
(1A) A financial agreement is binding on the parties to the agreement if:
(a) the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e) the agreement has not been terminated and has not been set aside by a court.
(1B) For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
(1C) To avoid doubt, section 90KA applies in relation to the enforcement application.
(2) A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
Section 90KA of the Act deals, among other things, with the enforceability of financial agreements. It provides as follows:
Validity, enforceability and effect of financial agreements and termination agreements
The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.
It is important to note that the fairness or equity or lack of fairness or equity of property settlement based on a binding financial agreement is not a relevant consideration. As Murphy J said in Hoult & Hoult (2011) FLC 93-489 at 86,065:
63.First, s 90G’s requirements must be seen against a crucial consideration. The legislature has decided that the essence of the regime created by Part VIIIA of the Act is that parties who are independently advised and receive appropriate advice should, in the absence of fraud, unconscionability or other vitiating factors, be perfectly free to bind themselves to an entirely unjust and inequitable agreement (in s 79 terms) that governs their future rights and operates as a bar to future property (and/or maintenance) proceedings. In short, if the relevant pre-requisites are met, and there is an absence of vitiating factors, the parties are perfectly free to make a “bad bargain”.
It is submitted on behalf of the husband that the 2007 agreement is uncertain and therefore is unenforceable.
In Twigg and Twigg v Kung (1994) FLC 92-456 the Full Court, Fogarty, Lindenmayer and Holden JJ were dealing with a decision at first instance that a costs agreement between solicitor and client was void for uncertainty. The Full Court held that the question of uncertainty is a discrete issue from issues such as fairness and reasonableness. The Full Court said at 80,716:
Courts will endeavour to avoid a construction which leads to invalidity, especially if the contract has in the meantime been acted upon: see Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd(1990) 20 NSWLR 310; Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd, supra; Biotechnology Australia Pty Ltd v Pace, supra; Meehan v Jones, supra; and see generally Cheshire and Fifoot's Law of Contract 6th ed. p. 207 et seq. These cases demonstrate a tendency to uphold contracts despite a lack of clarity in the words employed by the parties. Although most of these cases involved substantial commercial agreements, this should not be seen, as was suggested by counsel for the client, as being a development confined to commercial contracts. It is a development in the general law of contract: see, for example, the discussion in Cheshire and Fifoot at p.99.
In performing that task, it may be necessary to imply some additional words or term on an ad hoc basis. Similarly, where the parties are taken to have contracted against a particular trade or business background the terms of the parties' agreement may be construed against that circumstances: see Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226.
Additional words or a term will be implied if it is necessary to give "business efficacy" to the parties' agreement, that is, "in order to make the agreement work, or conversely, to avoid an unworkable situation": see the well known statement by the Privy Council in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of Shire of Hastings (1978) 52 ALJR 20 esp at pp. 26 & 30; and see also Hospital Products Ltd v United States Surgical Corporation & Ors (1984) 156 CLR 41 esp at 65-6, 117-8 and 121, and Moorgate Tobacco Co. Ltd v Philip Morris Ltd & Anor (No.2) (1984) CLR 414 at 435. However, "it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract": Codelfa Construction Pty Ltd v State Rail Authority of New South Wales(1982) 149 CLR 337 at p. 346 per Mason J; see also Hospital Products Case, supra, at 118.
In Kostres & Kostres (2009) FLC 93-420 (“Kostres”) the Full Court dealt with a decision of a Federal Magistrate in respect of a financial agreement. For present purposes, the circumstances in those proceedings bear some similarity to those before me. Ultimately, the Full Court found that the Federal Magistrate was in error in enforcing the agreement. It found that the agreement was void for uncertainty and should be set aside. As to its relevant terms the Full Court described the agreement in Kostres as follows at 83,788:
THE FINANCIAL AGREEMENT
24. The agreement executed by the parties, and dated January 2002, is expressed in clause 10 to be made in contemplation of and conditional upon the parties’ marriage. The agreement, which is in the form of a deed, contains two recitals as follows:
“A. [Ms Kostres] and [Mr Kostres] have agreed to marry [in January 2002]. Both of them are entering into the relationship with love for each other and with hope for the future.
B. In the hope of leading to tranquillity in their life together and to avoid or reduce any disputes between them in the future about the ownership, use and descent of property and to avoid unpleasantness and dispute should, despite their best intentions, the relationship and/or marriage in any circumstances not work out, they wish to set down in writing what they are agreeing to as to how their financial relationship with each other should be regulated.”
25. The relevant operative parts of the agreement include clauses 3 and 4 which provide as follows:
“3. [Ms Kostres] and [Mr Kostres] agree that the ownership of the assets set out in Schedules A and B hereto will remain separate throughout their marriage although each will permit the other to use what they have. Each party shall pay their own costs for the maintenance and repair and all outgoings in relation to their respective assets. Each party shall be entitled to retain for their own respective use and benefit any income or benefit received from their respective assets.
4. It is the intention of both [Ms Kostres] and [Mr Kostres] to provide proper support for each other during the marriage and neither will have any objection and will give every support and encouragement to the other continuing to work in such employment as they wish to follow. Both agree that any savings made by each of them from their own wages will remain their separate savings and neither party will make any call on the savings of the other”
26. The pivotal provision of the agreement insofar as the appeal is concerned is clause 6 particularly sub-clauses (c) and (d). It is in the following terms:
“[Ms Kostres] and [Mr Kostres] agree that in the event that the marriage should end that the assets of each of them either alone or jointly shall be dealt with as follows:
(a)The assets set out in Schedule A shall remain the property of [Ms Kostres].
(b)The assets set out in Schedule B shall remain the property of [Mr Kostres].
(c)Any assets of whatsoever kind or nature acquired during the relationship from joint funds shall be divided equally between [Ms Kostres] and [Mr Kostres].
(d)Any assets acquired by either party from their own moneys shall remain the property of that person.
(e)[Ms Kostres] and [Mr Kostres] shall retain for their own use their respective right, entitlement and interest in and to any superannuation or life policies owned by them.” (our emphasis)
27. Clause 11 of the agreement is also relevant. It provides as follows:
“Each of them has entered into this binding Financial Agreement to set out their rights and obligations to reduce any disputes between them in the future and save as provided hereunder, to avoid proceedings under Part VIII of the Family Law Act. The parties have reached this agreement to regulate and determine for all time their financial arrangements and commitment to each other in the event that their marriage breaks down in accordance with Part VIII of the Act.”
Later in Kostres the Full Court set out the terms of s 90KA of the Act and because of the reference to the Court having the same powers as the High Court in its original jurisdiction in relation to proceedings in connection with contracts or purported contracts, it set out sections 31 and 32 in Part IV of the Judiciary Act 1903(Cth) which is as follows:
31 Judgment and execution
The High Court in the exercise of its original jurisdiction may make and pronounce all such judgments as are necessary for doing complete justice in any cause or matter pending before it, and may for the execution of any such judgment in any part of the Commonwealth direct the issue of such process, whether in use in the Commonwealth before the commencement of this Act or not, as is permitted or prescribed by this or any Act or by Rules of Court.
32 Complete relief to be granted
The High Court in the exercise of its original jurisdiction in any cause or matter pending before it, whether originated in the High Court or removed into it from another Court, shall have power to grant, and shall grant, either absolutely or on such terms and conditions as are just, all such remedies whatsoever as any of the parties thereto are entitled to in respect of any legal or equitable claim properly brought forward by them respectively in the cause or matter; so that as far as possible all matters in controversy between the parties regarding the cause of action, or arising out of or connected with the cause of action, may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters may be avoided.
Later, the Full Court in Kostres described the process and reasoning that should have been followed by the Federal Magistrate at first instance. In summary the Full Court found to the following effect:
·It is important to keep in mind the wide definition of “property” under the Act and the subsection 79(4) regime;
·General law principles are relevant. In Calverley v Green (1984) 155 CLR 242 (“Calverley v Green”) the High Court found that the acquisition of a property occurred by the purchase. As to the mortgage, the acquisition of the property resulted from the joint borrowing rather than from the subsequent payment of mortgage instalments;
·In interpreting actual terms in a contract, the learned authors of Cheshire and Fifoot’s Law of Contract (9th edition) explain at 429 (Kostres [113]):
The High Court has repeatedly emphasised that the court approaches the task of ascertaining the meaning of the parties’ expressions objectively. It is not interested in their subjective understanding, but applies the meaning that an objective outsider would attribute to the contract in the circumstances. ...
·Later, at 429 to 430 the authors of Cheshire and Fifoot’s Law of Contract (9th edition) quote from the decision of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at paragraph 40 (Kostres [114]):
References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purposes and object of the transaction.
(footnote omitted)
·While common law principles of construction undoubtedly apply and can be used to avoid absurdity, the terms of the agreement must accurately reflect the intention of the parties at the time of the making of the agreement, and be unambiguous. In other words, the meaning to be given to expressions used in the agreement must be clear and their meaning certain (Kostres [127]).
·The contra proferentem rule requires that any ambiguity in the terms of a contract, is resolved against the party seeking protection where that is appropriate (Kostres [115]);
The Full Court in Kostres applied this process and reasoning to the facts of the case as follows, commencing at 83,803:
·It was considered that the Macquarie dictionary defines “acquire” as: “1. to come into possession of; get as one’s own ... 2. to gain for oneself through one’s actions or efforts”;
·To give practical meaning to clause 6 of the agreement, on the parties’ respective interpretations a number of words are required to be “read into” the agreement. The effect of their submissions is demonstrated by repeating the actual terms of the agreement, and then reproducing the words which they submit should be read into the agreement;
·Clause 6 of the agreement was as follows:
[Ms Kostres] and [Mr Kostres] agree that in the event that the marriage should end that the assets of each of them either alone or jointlyshall be dealt with as follows:
....
(c)Any assetsof whatsoever kind or nature acquired during the relationship from joint fundsshall be divided equally between [Ms Kostres] and [Mr Kostres].
(d)Any assets acquired by either party from their own moneysshall remain the property of that person.
·The parties agreed that it should nevertheless be read as if it was as follows as stated on page 83,804 of Kostres:
“[Ms Kostres] and [Mr Kostres] agree that in the event that the marriage should end that any interest, either legal or equitable, in property held by or on behalf of either of them (including any interest held personally, or in a company, trust or in any other entity) either alone or jointly shall be dealt with as follows:
(c) any financial contribution to the purchase price of any interest, either legal or equitable, in property held by them or on behalf of them (including any interest held personally in a company, on trust or in any other entity on their behalf) made during the relationship from funds derived from their joint endeavours, [or in the case of the wife from jointly held funds] although not necessarily contributed equally, shall be divided equally between [Ms Kostres] and [Mr Kostres];
(d) any financial contribution to the purchase price of any interest, either legal or equitable, in property held personally, or by or on behalf of either party in a company, trust or any other entity by or on behalf of one party exclusively from their own moneys or borrowings shall remain the property of that person. (our emphasis)”
·The purpose of Part VIIIA of the Act is to permit parties to arrange their own affairs in the manner they choose, to give certainty, and to avoid delay and costly disputes on marriage breakdown. The legislature intended that a binding financial agreement would oust the jurisdiction of the Court to adjust property, financial resources, and other matters to subject of the agreement (Kostres [122]-[123]);
·It is a well recognised principle in the law of contract that words “may generally be supplied, omitted or corrected, in an instrument, when it is clearly necessary to avoid absurdity or inconsistency” (Kostres [124]);
·While the parties suggested it was appropriate to construe clause 6 by reading into that clause a wider meaning so that the clause is interpreted not only to catch assets purchased by them personally, they were not in agreement as to the meaning which should be given to the term “joint funds”, nor did they agree whether the expression “from their own moneys” should, to give intent to their agreement, include the words “or from their sole borrowings” (Kostres [125]);
·Notwithstanding the concessions made by the parties, and the difficulties caused by the inconsistent literal interpretation of the word “acquire”, as asserted by the wife in respect of the business, but not the unit, the Full Court was not satisfied that it could supply or correct the terminology with appropriate certainty to give effect to the parties’ agreement (Kostres [126]);
·While, for the purpose of construing the agreement a court should, as in the context of a commercial agreement, apply an objective test of a reasonable bystander to the construction of an agreement, it cannot give meaning to an agreement whose terms are so imprecise or ambiguous the parties’ intent cannot be discerned. This is particularly so when regard is had to provisions of Part VIIIA in the overall context of the Act (Kostres [128]);
·The differing arguments of the legal representatives in this case as to how the terms “acquired”, “assets”, “joint funds” and “from their own moneys” should be construed brings into sharp focus the ambiguities in those terms found in the drafting of clause 6 of the agreement (Kostres [129]);
·The construction each party asserted should be given to the terms of clauses 6(c) and (d) went beyond that which could be objectively construed or implied to give effect to the parties’ intentions at the time the agreement was made. This was readily apparent from the Full Court’s re-construction set out above. The differing interpretation of the expressions “joint funds” and “from their own moneys” illustrated the Court’s concern (Kostres [132]);
·It was clear to the Full Court that the terms of the agreement were ineffective, particularly insofar as it was asserted they dealt with the right to seek division of the business, the trust and the two units. It followed from that conclusion that the Federal Magistrate’s decision to enforce the terms of the agreement as he did constituted appealable error (Kostres [133]).
For the purposes of the proceedings before me, the parties agree that the 2007 agreement is a binding financial agreement. Neither contends that the agreement is void or voidable. The question is whether the agreement is enforceable. In order to give effect to the parties’ intentions at the time the agreement was made, I am permitted to change the wording of the agreement in ways that can be objectively construed or implied.
The apparent intention of the 2007 agreement in respect of property is that on the breakdown of the parties’ marriage, assets held in joint names that were acquired after the marriage are the property of both parties and should be divided between them on a particular basis. Otherwise each of the parties shall retain what they brought into the marriage and what is otherwise in their own name. The agreement does not purport to deal with assets that are in joint names but that were not acquired after marriage. It may be that there are no such assets.
The agreement in Kostres was found to be uncertain and unenforceable and yet, in a way, the terms of that agreement are less ambiguous than those here. In Kostres, the identified property was to be divided equally between the parties. Here, the division was to take place on a “contribution basis”.
I gather from the submissions made on behalf of the wife that she contends that paragraph 3(1)(d) should be read as if it said:
The assets and personal effect which are held in both parties names, acquired after the marriage shall be property of both parties and shall be divided between the parties on a direct financial contributions basis.
It is conceded for the wife that an amendment is necessary if the agreement is to be clear enough to be enforced. The proposed amendment would mean excluding other forms of contribution. There is simply no basis for concluding that the parties intended such an exclusion. Subclause (1) is the preamble to clause 3 and it introduces the concepts of “financial and non financial contributions”. Having identified types of contributions in the preamble to the clause in question, there is no basis on which I can assume that the parties intended to limit the relevant contributions in the ways proposed. It would have been a simple thing for the agreement to expressly limit the type of contributions that would be relevant.
Even if the proposed amendment was allowed, I am not confident that the resultant meaning would be unambiguous. In my view it is not probable that each of the parties understood that there was one identifiable meaning to “shall be divided between the parties on a direct financial contributions basis”. I gather that the wife’s argument would run that under the amended clause, a property caught by paragraph (d) must be divided between the parties in the same proportions as they made any direct financial contributions to that property. Again, it is possible that the bolded words would represent what the parties intended when they struck the 2007 agreement. That is possible, but I cannot say that it is probable.
As has been submitted on behalf of the husband, the proposed amendment leaves open the issue of whether the contributions (on the wife’s case - direct financial contributions) were to the acquisition of the property (the Calverley v Green point) or to its “acquisition, conservation or improvement” to use the language of subsection 79(4) of the Act. The parties’ evidence about the shed/granny flat suggests that they each consider that there is some relevance to improvements at the property. However there remains no basis for assessing the probability that one interpretation represents, or represented, their shared belief.
Subclause 3(1) of the 2007 agreement also introduces the concepts of “matrimonial property” and “matrimonial properties”. Paragraph (a) introduces the concept of a “pool of matrimonial property”. It is not clear what the import is of those terms for the parties’ agreement.
I am not aware of any property that currently falls within 3(1)(d). The Suburb M property was acquired in the joint names of the parties. Soon after the 2014 agreement was signed, the wife gave the husband $60,000. The wife then discharged the mortgage of $417,485.38 on the Suburb M property using funds received from her mother and both parties executed the transfer of the property to the wife’s sole name. I could not find a reference in the parties’ evidence to the transfer being registered but assume that it was. If not there would have been no need for the husband to lodge a caveat on the title in order to prevent any further dealing with the property.
As to the submissions made on behalf of the wife - the parties’ general intention is said to be reflected in recital 7, which is as follows:
7.In the event of a breakdown of their marriage, the parties agree to amicably settle and divide their matrimonial property to avoid any expense, delay and bitterness arising from litigation as set down in this agreement.
As is referred to above, the submission runs that in order to achieve that aim it is necessary to read “contribution” in the phrase “contribution basis” in paragraph 3(1)(d) to mean “direct financial contributions”. There is no basis to believe that if the proposed amendment was made there would be no scope for “any expense, delay and bitterness arising from litigation”. There may be an argument about the meaning of “direct financial contributions” let alone about whether or not, and in what sum, any such contributions were made.
It is submitted on behalf of the wife that: “The non financial matters and s.75(2) matters could not sensibly constitute a “contribution”, but rather constitute “circumstances”.” In the shorthand of modern family law, aspects of the property settlement task are referred to as “assessing contributions and making s 75(2) adjustments” and to some extent that shorthand has been permitted. However, those terms are not found in the legislation in that form. Section 79(4) of the Act identifies the Court’s task in property settlement proceedings and it provides:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
By incorporation through subsection 79(4)(e) of the Act, the subsection 75(2) matters are just some of the matters to be taken into account in property settlement proceedings. It is not entirely accurate to make a distinction between contributions and subsection 75(2) matters. Subsection 75(2) is relevant to both spousal maintenance and property settlement proceedings. In paragraph 75(2)(j) it too deals with contributions. They are contributions by a party to the income, earning capacity, property and financial resources of the other party. There is also the catch-all provision at paragraph 75(2)(o) which could extend to other contributions. In my view, none of that is important for present purposes. Even with the amendment suggested on behalf of the wife, the 2007 agreement is unclear and therefore unenforceable, let alone capable of the intention expressed in recital 7.
The operative terms of the 2007 agreement as to property settlement are unclear, rendering them unenforceable. I note that there was no submission made about severing and thereby saving, the provisions of the 2007 agreement in respect of spousal maintenance. Of the Court’s own motion the 2007 agreement will be set aside.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 12 June 2018.
Associate:
Date: 12 June 2018
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