WELDON and ASHER
[2014] FCWA 11
•21 FEBRUARY 2014
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: WELDON and ASHER [2014] FCWA 11
CORAM: THACKRAY CJ
HEARD: 21 & 22 MAY 2013
DELIVERED : 21 FEBRUARY 2014
FILE NO/S: PTW 5974 of 2010
BETWEEN: MR WELDON
Applicant
AND
MS ASHER
Respondent
Catchwords:
BINDING FINANCIAL AGREEMENT - Financial agreement entered into between the husband and wife prior to their marriage - The wife insisted on the agreement to protect her assets and would not marry the husband if he did not enter into an agreement - The wife's sister acted as the wife's legal adviser - The husband seeks to set aside the agreement or have it found to be not binding.
SETTING ASIDE - Whether the agreement should be set aside on the grounds of undue influence, duress or unconscionable conduct - Consideration of the relationship between s 90K(1) and s 90K(1)(e) - Grounds to set aside agreement not established.
IS THE AGREEMENT BINDING - Whether the financial agreement is binding under s 90G - Consideration of the Full Court's decisions in Hoult & Hoult and Wallace & Stelzer - Requirement that the parties received legal advice but no requirement for a signed certificate or statement - The husband received the prescribed legal advice - The husband's advice was independent despite the former professional association between his solicitor and the wife's sister - The wife received the prescribed legal advice - The financial agreement is binding.
Legislation:
Family Law Act 1975 (Cth), s 90B, s 90G, s 90K, s 90KA
Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 (Cth)
Category: Reportable
Representation:
Counsel:
Applicant: Mr Berry
Respondent: Mr Nicholls QC
Solicitors:
Applicant: Calverley Johnston
Respondent: Hunter Cook Legal
Case(s) referred to in judgment(s):
ACCC v C G Berbatis Holdings Pty Ltd (2000) 169 ALR 324
ANZ Bank v Karam (2005) 64 NSWLR 149
Bank of Baroda v Rayarel [1995] 2 FLR 376
Barton v Armstrong (1976) AC 104
Black & Black (2008) FLC 93-357
Blomley v Ryan (1956) 99 CLR 362
Bridge v Campbell Discount Co. Ltd [1962] AC 600
Bridgewater v Leahy (1998) 194 CLR 457
Commonwealth Bank of Australia v Amadio (1983) 151 CLR 447
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
De Lorean v De Lorean 511 A.2d.1257
Diprose v Louth (No.2) (1990) 54 SASR 450
Fevia & Carmel-Fevia (2009) FLC 93-411
Fletcher v Fletcher 628 N.E.2d 1343, 1348 (Ohio 1994
Hoult & Hoult (2011) FLC 93-489
Hoult & Hoult (2013) FLC 93-546
In Re Marriage of Spiegel, 553 N.W.2d 309, 318 (Iowa 1996)
In The Matter of LC (Children) [2014] UKSC 1
Johnson v Buttress (1936) 56 CLR 113
Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35
Kostres v Kostres (2009) FLC 93-420
Louth v Diprose (1992) 175 CLR 621
Parker and Parker (2012) 260 FLR 284
Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1997] FCA 1107
Pascot & Pascot [2011] FamCA 945
Powell v Powell [1900] 1 Ch 243
Radmacher (formerly Granatino) v Granatino [2010] UKSC 42
Ribchenkov v Suncorp-Metway Ltd (2000) 175 ALR 650
Senior & Anderson (2011) FLC 93-470
Turner v Wendever [2003] NSWSC 1147
Wallace & Stelzer (2013) FLC 93-566
Whatley & Whatley [2007] FamCA 1671
Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
Introduction
1Shortly prior to their marriage in 2004, [Mr Weldon] (“the husband”) and [Ms Asher] (“the wife”) signed a financial agreement within the meaning of s 90B of the Family Law Act 1975 (Cth) (“the Act”). I am now required to determine two issues relating to the agreement, namely:
(i)Whether it should be set aside pursuant to s 90K of the Act on the grounds of undue influence, duress and/or unconscionable conduct on the part of the wife;
(ii)If the agreement is not set aside, whether it is binding within the meaning of s 90G of the Act.
2If I conclude the agreement should not be set aside, but find it is not binding, a further issue will arise concerning the application of s 90G(1A) of the Act. The parties propose a separate hearing to deal with that issue, should it arise.
Delay in delivery of reasons
3At the conclusion of the trial, it was agreed I should not deliver judgment until the decision of the Full Court in Hoult & Hoult had been handed down, as it was expected that the decision would resolve some questions of law that were controversial in the present matter. The parties were given the opportunity to make written submissions about Hoult & Hoult (2013) FLC 93-546 when the decision was published. The submissions of the wife were received on 19 August 2013. Those of the husband were received on 20 September 2013. The wife also filed further submissions she had prepared after her solicitors filed a Notice of Ceasing to Act; however, these are of little assistance as they are largely directed to issues relating to matters that will arise only if I have to consider s 90G(1A).
4At the time I received the last of the submissions about Hoult & Hoult, I understood that delivery of the Full Court’s judgment in Wallace & Stelzer was imminent. That decision was potentially of great significance (as was pointed out in the husband’s submissions) and I therefore decided not to complete these reasons until it was published. The parties have not taken up the opportunity afforded to them to make further submissions when Wallace & Stelzer (2013) FLC 93-566 was eventually handed down on 11 December 2013, shortly before I went on extended leave.
5While I regret the delay in delivery of my reasons, I considered it prudent to await publication of these two judgments with a view to avoiding an unnecessary appeal. As will become apparent, both have considerable importance in the resolution of this matter.
Brief background
6The parties commenced cohabiting in the wife’s home in late 2002, shortly after they first met. They were married [in March] 2004 and separated in February 2010. There is one child of the marriage, born in March 2005, who now lives with the wife and spends time with the husband.
7When the parties met, the wife owned her own business, an unencumbered home, superannuation and other assets. The husband had a car, but no other assets. The wife wanted to protect her assets and insisted she would not marry the husband, or even continue her relationship with him, unless he agreed to enter into a financial agreement.
8The parties ultimately executed the deed of agreement in February 2004. They each received advice about the agreement from a solicitor. Certificates signed by the solicitors confirming the advice said to have been given were contained in the body of the deed.
9As will be later explained, the content of the deed and the form of the certificates signed by the solicitors failed to take into account amendments to the Act which had come into effect very shortly prior to the agreement being executed.
The execution of the agreement and the lawyers’ certificates
10The circumstances and timing of the execution of the agreement and the certificates are of critical significance to the question of whether or not the agreement is binding. My findings about these matters are set out below.
11In the first half of 2003, the wife asked her sister, who is a legal practitioner, to prepare a financial agreement. The document prepared at that time was not produced in evidence, but it appeared common ground that it was substantially the same as that ultimately signed by the parties. (It seems at least one amendment was made, since the signed deed referred to the date of the wedding, which had not been set when the deed was first prepared).
12The wife’s sister knew it was necessary for the husband to obtain independent legal advice prior to the agreement being signed and therefore suggested he consult a former colleague of hers, [Ms W]. The husband saw Ms W, on 19 June 2003. He claims that, to the best of his recollection, Ms W said to him words to the effect:
I will not sign the certificate. There are things in here that I do not want anything to do with. Take it back to [the wife’s sister].
13Whatever Ms W may have said to the husband, the letter she wrote to him after their meeting said, “we confirm that you no longer intend to proceed with completing a pre-nuptial agreement”.
14The wife was furious when the husband told her that he would not sign the agreement. She reiterated that she would not marry him unless he signed – and in fact she told him to leave. She also terminated her pregnancy. The husband was annoyed and upset by the wife’s attitude, but refused to leave the home in which they were living. In discussions with the husband around this time, the wife attempted to justify her position by explaining she did not want him leaving the marriage after six months and making a claim against her assets.
15At some point thereafter, the parties agreed to be married. It is not possible to determine precisely when they set the date (the wife thought it might have been about six weeks before the wedding) or what was said about any change in the husband’s position about signing a financial agreement. In any event, it seems most likely that the next draft of the agreement was prepared by the wife’s sister in November 2003. As I have recorded, the final version contained the wedding date, so it is possible the date was set as early as November 2003. (The agreement was ultimately not dated, although “2003” had been typed into the place at the head of the document where it was intended the date of signing would be inserted).
16On 29 January 2004, the wife executed the deed, which provided that the husband would forego any claim in relation to the property then owned by the wife.
17Clause 3 specifically provided:
The parties want to fix their obligations to each other should their defacto relationship or marriage terminate. They want to accept the terms of this agreement instead of and in full discharge all other rights and claims. Without this agreement the parties would not continue to live in the [wife’s home].
18Clause 7 went on to provide that:
The parties agree to keep their financial affairs totally separate from each other during the relationship apart from sharing of regular living costs and expenses.
19On the same day the wife signed the deed, her sister signed a certificate, which was contained in the body of the deed, stating that she had given certain advice to the wife “in relation to an agreement in writing proposed to be entered into between [the husband and the wife]”. The certificate did not specify the date on which the advice was given, but clearly it had to be on or before 29 January 2004.
20After the wife had executed the deed, it was given to the husband. On 2 February 2004, the wife’s sister spoke with a solicitor, [Mr P], who was another former colleague of hers, to ascertain whether he would be prepared to advise the husband in relation to the agreement. Mr P confirmed that he had some experience with binding financial agreements and agreed to see the husband.
21The wife’s sister sent Mr P a copy of the agreement on 2 February 2004, and the husband went to see him on the same day. In the course of the appointment, the husband indicated his willingness to sign the deed, so long as certain amendments were made. On the same day, Mr P wrote to the wife’s sister advising of the amendments and seeking confirmation that the wife would be agreeable to them. The wife’s sister recalled speaking with the wife about the proposed amendments, and I am satisfied she did so.
22On 4 February 2004, Mr P spoke to the husband by telephone. During, or shortly after, the conversation, Mr P made a note indicating that he had been told by the husband that:
•the husband had discussed the amendments with the wife;
•the two amendments had been made to the document;
•the amendments had been initialled;
•both parties were now happy with the agreement and wanted to sign it.
23An arrangement was made during this conversation for the husband to come to Mr P’s office almost immediately to sign the document. The husband duly attended later that day and signed the deed and initialled the amendments. Mr P, who witnessed the husband’s signature, gave evidence that he could recall nothing about the husband’s demeanour to indicate he was not signing the agreement willingly.
24On the same day, 4 February 2004, Mr P signed a certificate that was also included in the body of the agreement, certifying he had given certain advice to the husband “in relation to an agreement in writing proposed to be entered into between [the wife and the husband]”.
25The signed deed was then returned to the wife or her sister and was thereafter retained by the wife in her safe, to which the husband did not have the combination. The wife said she kept the agreement in the safe because she did not trust the husband and thought he was “after her money”.
26Importantly, the wife’s sister did not sign a further certificate confirming she had given advice to the wife about the agreement prior to it being signed in its amended form.
The advice given by the wife’s sister
27The certificate signed by the wife’s sister was in the following form:
I, [the wife’s sister] … Solicitor hereby certify that in relation to an agreement in writing proposed to be entered into between Ms Asher and Mr Weldon (“the parties”) I advised [the wife] (“my client”) independently of the other party and before the time at which my client signed the agreement, as to the following matters:
1.The effect of the agreement on the rights of the parties to apply for an order under Pt VIII of the Family Law Act 1975 and pursuant to the provisions of the [Family Court Act1997 (WA)].
2.Whether or not at the time it was to the advantage, financial or otherwise of my client to enter into the agreement.
3. Whether or not at the time it was prudent for my client to enter into the agreement.
4.Whether or not at the time and the light of such circumstances [sic] as they were at the time reasonably foreseeable, the provisions of the agreement were fair and reasonable.
28The matters about which advice was given, as described in the certificate, were the matters prescribed by the Act when Part VIIIA was inserted in 2000, notwithstanding that the Act had been amended in 2003 prescribing a somewhat different range of matters about which advice had to be given. These amendments came into force with effect from 14 January 2004.
29As the agreement was entered into shortly after the commencement of those amendments, the advice said to have been given was not compliant with the law as it stood at the time (Wallace & Stelzer at [93] and [100] and Whatley & Whatley [2007] FamCA 1671), and would have rendered the deed not binding, since the Full Court was later to hold that strict compliance with the statutory requirements is necessary to oust the Court’s jurisdiction (Black & Black (2008) FLC 93-357). This strict approach prompted the enactment of the Federal Justice System Amendment (Efficiency Measures) Act (No. 1)2009 (Cth) (“the 2009 amending Act”), the express aim of which was to ensure a party could not avoid an agreement based on what was described as “a mere technicality”. The amendments had both prospective and retrospective effect.
30The wife’s sister was unable to recall the precise content of the advice she gave to the wife in relation to the agreement, other than that it was binding. Nevertheless, it was not disputed that she had given the wife the advice generically described in the certificate. The issue of importance, however, is that the certificate could only have been directed to advice given on, or prior to, 29 January 2004 and hence was not advice in relation to the agreement ultimately concluded, which contained two amendments made after the original advice was given. The significance of this will be discussed later in these reasons.
The advice given by the husband’s solicitor
31The certificate signed by Mr P on 4 February 2004 was in the same form as that signed by the wife’s sister, save that two handwritten amendments were made to it, apparently with a view to improving the grammar. Although Mr P had no recollection of who made the amendments to the certificate, I consider it most probable that he made them.
32The husband claims it was he who raised with Mr P the concerns that led to the two amendments to the agreement itself. The first was a requirement for the husband to pay an unspecified amount of rent to the wife for the occupation of her home during their marriage, and the other was to require the husband to remove his belongings within seven days in the event of the breakdown of their relationship. At the husband’s request, the requirement for payment of rent was deleted and the time in which he had to remove his belongings was extended to 30 days.
33In his oral evidence, the husband claimed that these two provisions were the matters that had caused Ms W to say that she did not want to have anything to do with the agreement, notwithstanding that in his affidavit the husband said that he could not recall her reasons. Not a great deal turns on it, but I am not convinced it was the husband who raised these matters with Mr P.
34The husband also claims he specifically asked Mr P whether the agreement would affect the plans he had with the wife to buy investment properties and start a family. He claims that Mr P responded in words to the effect:
Don’t worry about it, pre-nups aren’t legal anyway and as soon as you have a child, buy a house together, it will get thrown out as it’s null and void. It is not worth anything anyway.
35The husband further claims Mr P did not advise him as to the advantages or disadvantages of entering into the agreement, and in fact said he did not recall Mr P giving any other advice about the agreement. The husband claimed in his oral evidence that the only advice Mr P had given to him was to read the agreement.
36If the husband had read the agreement, which I am satisfied he did, he would have seen recital F, which records that:
FEach of the parties has received separate legal advice before executing this agreement concerning the following matters:-
a)the effect of this agreement upon the rights of the parties to apply for orders under the [Family Court Act 1997 (WA)] and the [Family Law Act 1975 (Cth)] in respect of property, spousal maintenance and the effect of this agreement upon the rights of each party to make an application in relation to the other party’s estate or notional estate upon the death of the other;
b)whether or not it is to the advantage, financially or otherwise, of each party to enter into this agreement;
c)whether or not in light of their present circumstances, that the provisions of this agreement are fair and reasonable.
37In other words, the husband expressly acknowledged having received all the advice Mr P’s certificate said had been given, save for whether or not it was “prudent” for him to enter into the agreement.
38Mr P strenuously denied that he had told the husband that the agreement was not legal and would be “thrown out” as being null and void. He said he had found nothing in the agreement which would render it unenforceable. He added that if there had been any doubt about its enforceability he would have discussed the matter with the wife’s sister. Although Mr P readily acknowledged he had no recollection of various other matters put to him, he was adamant that his certificate was accurate.
39Mr P did not write to the husband after his meeting with him confirming any of the advice he had given, nor did he make a written note of his advice. The husband also said he did not recall having been given a signed copy of the agreement until one was provided by the wife’s solicitors in June 2011. The wife asserted that the husband informed her during the marriage that he had thrown out his copy of the agreement. I am satisfied the husband received a copy of the agreement at the time it was executed.
The representations allegedly made by the wife and the improvements to her home
40I accept that the husband made clear to the wife that he would prefer not to enter into a financial agreement. He claims that when he expressed reservations to the wife about the agreement, she would say words to him to the effect:
If this doesn’t work out within six months of us marrying, I don’t want you taking half of my assets and that’s why I want you to sign the agreement that you won’t do so.
41The husband alleges that the wife would also then usually say to him words to the effect that after six months of marriage she would tear up the agreement. He says that, after six months of marriage, he pointed out to the wife that they were still together, and asked her when she was going to tear up the agreement. He alleges that she responded by saying words to the effect of, “don’t worry about that.” The husband further claims that he asked the wife on a number of subsequent occasions to tear up the agreement, but she refused to do so.
42The husband also claims that he and the wife aspired to build a real estate portfolio and that they discussed this quite often. He asserts that the wife said that they could use her property as security for any borrowings to finance their portfolio. He also claims that they discussed renovating and improving the wife’s home. The wife acknowledges that the husband had said he wanted to acquire investment properties, using her home as security, but she claims he wanted the investment properties to be in his name alone. In his oral evidence, the husband said it was the wife who wanted any property they acquired to be in his name.
43The husband says that he undertook research about acquiring real estate over a period of years and that the wife showed interest and some enthusiasm. He claims they ultimately agreed, in about 2008/09, that they would acquire two properties in Melbourne, but that the wife then changed her mind and refused to go ahead with the purchase. The wife says it was only one property and that the husband wanted to buy it in his name alone. (Under the terms of the financial agreement the husband would retain any property acquired in his sole name).
44The husband also gave evidence of arranging tradesmen to undertake work at the wife’s home and also of having personally undertaken a variety of improvements to the property. He claims that the cost was met from the income of both parties. The wife asserts that most of the improvements to the property were undertaken by tradesmen and paid for from her own income. She says the husband did not undertake as much work around the property as he alleged, although she agrees he had done some work.
45The parties separated for a period in 2009 (the duration was in dispute). The husband claims that, during the separation, the wife pleaded with him to come back and assured him they would purchase an investment property soon after getting back together and that she would tear up the agreement. The wife denies agreeing to this. The husband did return home, but the agreement was not torn up, nor did the parties acquire an investment property prior to them finally separating the following year.
46My findings in relation to these conflicting assertions, which require an assessment of the credibility of the parties and other witnesses, are set out below.
Credibility of the parties and witnesses
47One major difficulty with assessment of credibility is that the crucial events took place more than 10 years ago. The three lawyers (Ms W, Mr P and the wife’s sister) all acknowledged they had little or no recollection of what was said or done at the time. On the other hand, both the husband and the wife purported to have a good recollection of most events and conversations.
48There were very few documents available to assist in determining which version was likely to be more accurate, but such objective evidence as was available established that the husband’s trial affidavit (paragraph 20 and following) contained a quite inaccurate chronology of events relating to the agreement, which must place a question mark over other elements of his evidence. For example, the husband claimed it was not until about two months prior to the wedding that the wife raised with him the idea of entering into a written agreement, whereas he had, in fact, been to see Ms W about such an agreement in June 2003 – i.e. nine months before the wedding.
49It is not necessarily the case that either party deliberately gave false evidence, although at least one of them must be mistaken about various matters they now claim to remember. As Lady Hale said in In The Matter of LC (Children) [2014] UKSC 1 at [67]:
Almost every witness … engages in a certain amount of (conscious or unconscious) manipulation of their recollection of past events to meet their present interests.
50The husband feels “hard done by” because he is facing an outcome where he will receive nothing by way of property settlement, notwithstanding having been in a relationship with the wife for eight years, during which time he did at least some work around her property. On the other hand, the wife is anxious to avoid an outcome where the husband shares in any of the assets she currently has, which appear to have been largely, if not entirely, owned by her prior to the commencement of the relationship.
51The husband presented as a meek and mild individual, which is not to say that this is necessarily reflective of his behaviour during the relationship. I formed the impression that he was sometimes giving evidence of things he wished had been said or had happened, and I was not persuaded his evidence on the crucial issues was reliable, especially as his recollection directly conflicted with statements contained in a document he signed at the time. In dealing with the issue of the advice allegedly given by his solicitor, I consider it likely that the husband has converted his failure to recall what was said to him into a positive memory that he was given no advice.
52It is also noteworthy that the husband’s evidence about the advice he was given altered from time-to-time. For example, at one point he denied saying he had not been given any advice, but asserted instead that he did not know what advice he should have been given; while at another point he said he received the advice he thought he had to receive. At another point, he appeared to say that he accepted and understood the agreement would have binding effect, but that it was only to have operation for the first six months of the marriage.
53Given that the husband had probably previously been given advice by Ms W not to enter into a financial agreement, I consider it likely that when he went to see Mr P he did so because he was now prepared to enter into such an agreement to ensure the marriage proceeded, regardless of what advice he might be given. The content of that advice at the time, therefore, was not likely to matter greatly to the husband and was accordingly less likely to be something he would later be able to recall.
54I consider it likely there was a kernel of truth in the husband’s story that the wife assured him she would destroy the agreement after six months of marriage, in that I accept that at times in their discussions the wife said to him something along the lines of, “I want you to enter into a financial agreement so that if you left me six months after we married you would not take me for half”. From this grew the story that the wife had, in fact, promised to destroy the agreement after six months of marriage.
55It is highly improbable that the wife would have wanted to protect herself against a claim by the husband for only six months. It is equally improbable that the husband believed the wife would be prepared to allow him to make a claim if he stayed in the relationship for just six months. It is also highly improbable that the husband would have not informed Mr P about any discussion that the agreement was to have effect for only six months. Had Mr P been so informed, I have no doubt an appropriate amendment would have been sought to the agreement, along with the other amendments. Although the husband claimed at one point he told Mr P that it had been agreed the arrangement would have effect for only six months, he later said he was not sure he had done so. Furthermore, although Mr P’s notes of his interview were scrappy (and decipherable only by Mr P), they contain no mention of any such discussion.
56I do not accept the husband’s assertion that Mr P said the duration of the agreement did not matter because the whole arrangement was null and void anyway. This proposition does not sit well with the fact that Mr P engaged in a process to obtain amendments to the agreement which would scarcely have been necessary if it was going to be null and void. Furthermore, the husband’s assertion that he had been advised by Mr P that the agreement would be null and void is inconsistent with the evidence that he repeatedly asked the wife to tear up the agreement and was upset by her refusal to do so. His claim that Mr P had informed him that the agreement would not be binding in the event that, for example, he and the wife had children also does not sit well with the clear statement in Clause 18 of the deed that the “birth of children will not terminate this agreement”. It is also noteworthy that the husband did not suggest he had been informed by Ms W that the arrangement would be null and void.
57In stating these conclusions, I have not overlooked that it was put to the wife that she had volunteered in her affidavit, “out of the blue”, that there had been no discussion of the agreement being limited to any time period. The point being made in this part of the cross-examination was that at the time of swearing the affidavit, the wife had not seen the husband’s affidavit in which he claimed the agreement was meant to be limited in effect to just six months. Although I acknowledge the wife’s affidavit was drafted prior to her seeing the husband’s affidavit, and although she did not herself volunteer this explanation, I consider it highly likely that at some earlier stage the wife was appraised of the fact that the husband would say at trial that the agreement was to bind the parties for only six months, prompting her to deal pre-emptively with the issue in her trial affidavit.
58I was similarly not persuaded that I should accept all of the evidence given by the wife – indeed in some matters, albeit ones which ultimately I did not consider were crucial, I thought it unlikely her evidence was accurate. She presented as an angry and aggressive person; indeed she herself acknowledged that on occasions she could be aggressive. Her manifest fury about the husband’s attempts to overturn the agreement provided strong motive for her to give self-serving evidence. Nevertheless, I considered her version of what was said in the critical conversations more likely to be accurate than the version given by the husband.
59Ms W, the husband’s first solicitor, gave her evidence in a careful and forthright fashion and I had no hesitation in accepting her testimony.
60I was inclined to accept the testimony of the wife’s sister, who gave evidence under subpoena, although I accept the submission of counsel for the husband about the somewhat unconvincing way in which she gave evidence about an issue of waiver of legal professional privilege. She readily acknowledged that she could not recall much of the factual matters, given the passage of time. When she did purport to recall specific matters, she gave a logical explanation for her ability to recall. I accept that in suggesting that the husband should consult two solicitors who were former colleagues of hers (albeit only for fairly short periods) the wife’s sister was not anticipating that they would give advice favourable to the wife, but rather was intent on ensuring that the solicitors consulted had some experience with binding financial agreements; were prepared to take on the matter; and would not be overly expensive.
61In being prepared to accept the evidence of the wife’s sister, I have not overlooked the fact that in a letter sent by her own solicitor on 26 November 2012 it was stated that, to the best of her recollection, she had not referred the husband to any solicitor. That statement was, at best, arguably an evasive response to an enquiry from the husband’s solicitors, or, at worst, inaccurate. In any event, a more complete/accurate response to the enquiry was later sent by the wife’s solicitors in sufficient time to ensure the husband’s case was not affected by his own inability to recall the name of the solicitor he had first consulted.
62Mr P’s evidence, on its face, appeared to me to be credible. He considered questions thoughtfully and gave careful answers. Nothing he said stretched credulity. It was, of course, regrettable that Mr P failed to keep even a perfunctory note of the advice he gave to the husband, but the absence of such a note does not mean the advice was not given. In his defence, it might also be said that he considered the certificate signed by him to be an adequate record of his advice, although with the benefit of hindsight he knew it was not.
63Mr P acknowledged that he had no independent recollection of what was said in his discussions with the husband at the time of the signing of the deed, although he had made some notes during the course of their first face-to-face meeting on 2 February 2004. He therefore had no recollection of what precise advice he gave to the husband which led him to be satisfied that he could sign the certificate attached to the agreement.
64Although Mr P had no independent recollection of the meeting, he was absolutely certain that he would have gone through the agreement with the husband clause by clause, since the very purpose of the meeting was to give him advice about the agreement. The manner in which he gave this evidence was entirely convincing, and I accept his testimony.
65In forming a favourable view of Mr P’s credibility, I have not overlooked the fact that he has been the subject of disciplinary proceedings and is prevented from applying for a practising certificate in this State before July 2015 (although he is presently practising law in [an overseas country]). The reasons for his effective suspension from legal practice in this State are to be found in judgments of the State Administrative Tribunal and the Full Bench of the Supreme Court of Western Australia which were provided to me by consent (but not put to Mr P in cross-examination). The judgments reveal that the disciplinary proceedings arose out of failure to complete work in a timely fashion and the attempted concealment of this by lying to two clients. However, the Full Bench noted in its decision that there were some “unusual features” of the proceedings, including the fact that the instances of procrastination by Mr P were:
59.… relatively few in number and occurred in a context in which the practitioner was otherwise conducting his practice in a most satisfactory manner and was generally held in high regard by his other clients, and his professional colleagues. He had a reputation for competence and ability …
66The Full Bench went on to say:
62.The lack of any apparent motivation in the form of financial gain for the misrepresentations made by the practitioner and the lack of any evidence to suggest that misrepresentation or dishonesty is a frequent or common characteristic of the practitioner’s behaviour, lead the court to the conclusion that the practitioner is not intrinsically dishonest, nor lacking in integrity …
67There was no suggestion that the wife’s sister was aware of any propensity of Mr P to conduct himself in anything other than a professional manner. Indeed, it might be thought unlikely that the wife’s sister would knowingly recommend the husband to a solicitor who would be dilatory, given the obvious desire of the wife to have the issue resolved promptly, prior to the impending wedding. And, of course, there was no delay on the part of Mr P in the conduct of this matter, as the chronology above will attest.
68Nevertheless, the husband went so far as to suggest that Mr P had been selected by the wife’s sister as someone who would “ask no questions and just sign without thought or advice”. The fact that Mr P did not regard himself as being “a rubber stamp” in securing the execution of the agreement can be seen by the language he employed in his facsimile to the wife’s sister of 2 February 2004, in which he said it was “artificial and demeaning” for the husband to be expected to pay rent to the wife while married to her. The fact that he gave careful consideration to the terms of the agreement can also be seen from his facsimile where he drew attention to what he regarded as internal inconsistencies in the agreement (albeit these claimed inconsistencies were not ultimately corrected). Furthermore, if I am correct in believing that it was he who made the alterations to the certificate, it will be seen that Mr P also paid close attention to the content of the certificate he was called upon to sign.
Should the agreement be set aside under section 90K?
69Having set out my views about the credibility of the witnesses, I will turn first to consider whether the agreement should be set aside pursuant to s 90K, since resolution of that matter in the husband’s favour would make it unnecessary to consider whether the agreement is binding within the meaning of the Act. It should be noted, however, that proof of the existence of one or more of the matters described in s 90K(1) will not lead automatically to an order to set aside the deed. The power to set aside a financial agreement is discretionary – so much appears from the presence of the word “may” in the opening sentence of s 90K(1). See also Kostres v Kostres (2009) FLC 93-420 at [156].
70The husband asserted in his amended particulars filed 15 May 2013 that the financial agreement should be set aside:
… because s. 90K(1)(b) or s. 90K(1)(e) or both of the said provisions of the Act apply to the circumstances of this case, because the wife engaged in duress or (alternatively) undue influence or (alternatively) unconscionable conduct or (alternatively) a combination of two or more of the said doctrines in procuring the husband to sign the agreement.
71The husband provided six “particulars” said to support these propositions. I will discuss these factual matters first, before turning to the legal issues.
(a)The wife was responsible for selecting and appointing legal advisers for the husband to consult.
72I am not persuaded that the wife was responsible for appointing legal advisers for the husband to consult. I accept that the wife’s sister identified potentially suitable legal practitioners whose names were given to the husband either by the wife or by the wife’s sister. The wife’s sister also made contact with the solicitors and I accept she may even have made an appointment for the husband. I am satisfied, however, that it was the husband who, as a matter of law, formally appointed both Ms W and Mr P (although it can only be the selection of Mr P which is relevant, given Ms W had nothing to do with the final form of the agreement and allegedly recommended against entering into the first agreement).
(b)Prior to the signing of the agreement, the wife represented to the husband that if he did not sign the agreement the parties would not marry.
(c)Prior to the signing of the agreement, the wife represented to the husband that she would tear the document up after six months.
73As I have earlier found, the wife did represent to the husband that if he did not sign the agreement the parties would not marry, but I am not persuaded that the wife represented to the husband that she would tear up the document after six months.
(d)Prior to and after the parties signed the said agreement, the wife represented to the husband that she would use her equity in [the wife’s home] to enable the parties to purchase real estate.
(e)In reliance upon the representation, the husband spent much time, effort and money on renovating [the wife’s home].
74I am not persuaded that the wife did more than to indicate (honestly) that she was willing to consider future investment opportunities with the husband which might involve using her home as security for borrowings. However, I am not satisfied that the work the husband did around the wife’s property was done on the basis of any representations made by the wife concerning the use of the equity in the property as security for borrowings. Nor am I persuaded that the husband’s work around the property was as extensive as he claimed.
75It should be remembered that the husband was living in a home fully owned by the wife. Presumably he hoped the relationship would extend over a long period and he would continue to have the benefit of that accommodation. His conduct in carrying out some work around the property would be at least as consistent with a desire to provide a more comfortable/attractive residence for himself, his wife and their child as it would be with a desire to increase the value of a property (which was already free of encumbrance) in order to support future borrowings.
76In any event, even on the husband’s own evidence, the wife was not “put to the test” about the acquisition of real estate until 2009 when the husband finally put forward a proposal to buy a property. When the proposal was finally forthcoming, I accept it was for the acquisition of a property in the sole name of the husband. I do not accept that the wife ever led him to believe that she would help him to acquire property to be held only in his name, especially given the terms of the financial agreement.
77In his closing submissions, counsel for the husband sought to rely on the wife’s alleged representations as part of his argument relating to unconscionable conduct, noting that the wife had failed to honour the representations after the contract was executed. Counsel conceded, however, that unconscionable conduct would ordinarily need to be referrable to matters relating to the execution of the agreement, rather than events occurring subsequently.
78While not abandoning reliance upon the representations as constituting part of the wife’s unconscionable conduct, as a fall back position counsel for the husband described the representations as “akin to a claim of some form of misrepresentation by the wife” which would render the agreement “void, voidable, or unenforceable”. I am unable to accept that proposition. The law is stated in Cheshire & Fifoot’s Law of Contract, 10th edition at 11.14 in these terms (footnotes omitted):
A statement of intention cannot normally be said to be true or false, unless it is made fraudulently. Consequently, statements made of intention are not normally actionable as misrepresentations and must be embodied in a promise to attract a contract remedy. But when one states his or her intention fraudulently, it is actionable.
79Here, the deed did not contain any promise by the wife to allow her property to be used as security for future borrowings and in his particulars the husband did not seek to invoke s 90K(1)(a), which deals with fraud. I therefore do not propose to consider this aspect of the husband’s claim further.
(f)The husband would not have signed the said agreement but for the wife’s conduct and representations described in sub-paragraphs (a) to (d) inclusive, set out above.
80I accept that the husband would not have signed the agreement if it had not been for the wife’s insistence that she would not marry him unless he did so. Otherwise, the factual basis for this assertion has not been made out.
The relationship between s 90K(1)(b) and s 90K(1)(e)
81It will be seen that the husband relies only on s 90K(1)(b) and s 90K(1)(e) which relevantly provide that:
A court may make an order setting aside a financial agreement … if, and only if, the court is satisfied that:
(b) the agreement is void, voidable or unenforceable; or
…
(e)in respect of the making of a financial agreement – a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable …
82Subparagraph 90K(1)(b) reflects the principles of common law and equity by which an agreement would (or could) fail because the agreement is affected, inter alia, by duress, undue influence, misrepresentation or unconscionability. So much is clear from s 90KA which provides that:
The question whether a financial 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 …
83Although it was not the subject of any submission before me, in cases more “borderline” than the present it may be important to determine whether or not the inclusion of s 90K(1)(e) adds anything to the legislation not already provided by s 90K(1)(b). Le Poer Trench J in Pascot & Pascot [2011] FamCA 945 at [296] and [297] considered it did not. In expressing that view, his Honour drew attention to the provisions of the relevant Explanatory Memorandum, which stated that the concept of “unconscionability will retain its ordinary meaning within the law of contract” and further stated that s 90K(1)(e) had been included “simply to make it clear that this ground is included within the grounds for setting aside an agreement”.
84However, as French J (as he then was) said in ACCC v C G Berbatis Holdings Pty Ltd (2000) 169 ALR 324:
[23]The concept of unconscionability is arguably to be found at two levels in the unwritten law. There is a generic level which informs the fundamental principle according to which equity acts. There is the specific level at which the usage of “unconscionability” is limited to particular categories of case …
85To similar effect, French J went on to say (my emphasis):
[42]There is no rule of equity which prevents unconscionable conduct. Rather there are remedies available to relieve against or prevent such conduct in certain classes of case.
86The question then arises as to which of the ordinary meanings of “unconscionability” within the law of contract should be applied to s 90K(1)(e) – the “generic” or the “specific”. If it is the “specific”, then s 90K(1)(e) would appear to have no operation independent of s 90K(1)(b), which already provides power to set aside an agreement that is “void, voidable or unenforceable”. An agreement tainted by unconscionable conduct in the “specific” sense could be set aside pursuant to s 90K(1)(b).
87At first glance it might be thought that the legislation intends that the “specific” rather than the “generic” use of “unconscionable” is to be preferred, since s 90KA provides that the question whether an agreement “is valid, enforceable or effective” must be decided according to the principles of law and equity applicable in dealing with contracts. However, on closer examination, it is obvious that s 90KA cannot govern all of the various subparagraphs of s 90K(1), with subparagraph (d) being the best example. Thus, there can be no doubt that s 90K(1) provides power to set aside financial agreements even if they would otherwise be “valid, enforceable or effective … according to the principles of law and equity”.
88A full examination of the interrelationship between s 90K(1)(b) and s 90K(1)(e) would also require careful analysis of the fact that s 90K(1)(e) only found its way into the legislation by an amendment originating in the Senate, hence potentially casting doubt on the view expressed in the House of Representatives (Commonwealth, Parliamentary Debates, House of Representatives, 9 November 2000, 22611 (Darryl Williams QC, Attorney-General)) that s 90K(1)(e) should be regarded as surplus, given the presence of s 90K(1)(b). This was not the opinion of the Democrat’s Senator Greig who had moved the amendment which introduced s 90K(1)(e) (Commonwealth, Parliamentary Debates, Senate, 7 November 2000, 19281 (Brian Grieg)). He expressly stated that the intention of the Democrat amendment was to broaden the grounds for exemption in s 90K(1)(b), albeit “just a little”. It should also be noted that the amendment was, in effect, a compromise, since the Government considered s 90K(1)(b) was sufficient, whereas the Labor opposition wanted to introduce a far wider basis for exemption, by introducing concepts of fairness, harshness and public interest.
89In speaking in support of his amendment, Senator Grieg drew attention to the use of the word “unconscionable” in the Trade Practices Act1974 (Cth) (“the TPA”). Given this express reference to the TPA in the Senate debate, it might also be appropriate, in any future analysis of the interaction of the two provisions, to consider whether there is any significance in the fact that Parliament, in enacting s 90K(1)(e), used a different form of words to that which it had used when enacting s 51AA of the TPA – where the word “unconscionable” was qualified as meaning “unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories”. This usage is in contrast not only with s 90K(1)(e) but also with the use in s 51AC of the TPA of the words “unconscionable conduct”, which were not confined in the same way as in s 51AA. Parliament instead chose in s 51AC to provide examples of unconscionable conduct, some of which are clearly wider than the type of conduct that would attract relief pursuant to the “unwritten law”.
90The fact there may be significance to be drawn from the absence in s 90K(1)(e) of the qualifying words, “within the meaning of the unwritten law …”, can be seen from the following remarks of French J in ACCC v C G Berbatis Holdings Pty Ltd [at 26]:
Section 51AA [of the TPA] prohibits corporations from engaging in conduct which is unconscionable within the meaning of the common law of Australia. The meaning of the term is found in the dictionary. Its meaning is not altered by the unwritten law. What the unwritten law does presently is to confine its operation to certain classes of case. The reference in s 51AA to the “meaning of the unwritten law” is a reference to the classes of case in which the unwritten law will award remedies for unconscionable conduct ...
91French J’s judgment was the subject of a successful appeal, but there appeared to be no disagreement at the appellate level with the proposition above. On the contrary, remarks made in the judgments of those comprising the majority in the High Court may be seen as providing support for the proposition that the absence of any words of qualification to the word “unconscionable” in s 90K(1)(e) may have significance. For example, Gleeson CJ said, (2003) 214 CLR 51 at [7], (my emphasis):
In the context of s 51AA, with its reference to the unwritten law, which is the law expounded in such cases as those mentioned above, unconscionability is a legal term, not a colloquial expression. In everyday speech, “unconscionable” may be merely an emphatic method of expressing disapproval of someone’s behaviour, but its legal meaning is considerably more precise.
92Gummow and Hayne JJ in their joint judgment, at [32], observed that in determining whether a party has engaged in unconscionable conduct, s 51AC “does not rely simply upon ‘the unwritten law’”. Their Honours, in referring to the differently worded s 51AA, later went on to say:
38.The parties, correctly, accept that the term “unconscionable” is not used in s 51AA in any sense which is at large or reflects an ordinary or natural meaning in general usage. That is plain from the identification in s 51AA of “the meaning” given by “the unwritten law, from time to time”. The identification thus made is the principles of law and equity expounded from time to time in decisions respecting the common law of Australia …
93I observe also that in arguing against an expansive approach to the interpretation of s 51AA of the TPA (now to be found in s 20 of the Australian Consumer Law), Professor Dal Pont in Equity and Trusts in Australia 5th edition observed, at 9.170, that “had the section been intended to apply to unconscionable conduct generally, it could have ended with the word ‘unconscionable’” – which is, of course, precisely what has occurred with s 90K(1)(e).
94The husband did not expressly contend that s 90K(1)(e) has any application additional to that provided by s 90K(1)(b). However, given the view I will later state about his failure to adduce sufficient evidence to satisfy s 90K(1)(b), I thought it proper to indicate that I have not discounted the possibility that s 90K(1)(e) has some independent application and that relief might therefore potentially be available in circumstances where equity would not intervene.
95It may well be true, as Lord Radcliffe said, that “‘unconscionable’ must not be taken to be a panacea for adjusting any contract between competent persons when it shows a rough edge to one side or the other” (BridgevCampbell Discount Co. Ltd [1962] AC 600 at 626). However, given what I perceive to be the manifest differences in factors underpinning commercial contracts and those underpinning agreements between prospective spouses it may well be entirely appropriate for the grounds for relief to be “just a little” wider than those applying in the commercial sphere, as the Democrat amendment intended. (Lady Hale in her dissenting judgment in Radmacher (formerly Granatino) v Granatino [2010] UKSC 42 identified, at [135], the competing arguments and concluded, in effect, that it is for Parliament to determine where the line is to be drawn. Her Ladyship also went on, at [175], to convincingly explain why “marriage is not only different from a commercial relationship in law, it is also different in fact”).
96Whatever interpretation is given to s 90K(1)(e), it is clear from the terms of the section itself that the only unconscionable conduct that can be recognised is that which is “in respect of the making of a financial agreement”, and hence the provision is not concerned with what occurred, or did not occur, after the deed was executed (Kostres v Kostres).
Undue influence/duress
97Although the husband’s amended particulars indicated that he asserted the existence of both undue influence and duress, his counsel appeared to focus his argument on duress. To the extent that reliance was placed upon facts allegedly showing that the wife occupied “a position naturally involving an ascendancy or influence” or that the husband occupied a position of “dependence or trust” such as might constitute undue influence (Johnson v Buttress (1936) 56 CLR 113 at 134-5), this appeared directed more to the claim of unconscionable conduct.
98Notwithstanding some evidence given (very belatedly) by the husband relating to physical assaults on him by the wife (the veracity of which I doubted in any event), counsel for the husband said that his client’s case did not rely upon common law doctrines of duress requiring proof of threats to life or limb, but rather relied upon the doctrine of illegitimate pressure as explained in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40. Counsel for the husband submitted that this pressure constituted duress since the husband had entered into the agreement only because his will had effectively been “deflected or overborne” by an “improper motive for action” – citing Lord Wilberforce and Lord Simon of Glaisdale in Barton v Armstrong (1976) AC 104 at 121.
99Counsel for the husband said his submission had to be considered against the backdrop of:
•the husband not wanting to, or being reluctant to, sign a financial agreement;
•the document containing a marriage date; and
•the evidence that unless the agreement was signed there would be no marriage.
100It was submitted that the husband’s (accurate) understanding that he could only be married if he entered into the agreement provided the “improper motive for action” sufficient to make out the claim of duress. It was further submitted that there was a form of psychological pressure inherent in the dynamic between the husband and the wife which the Court should not countenance as being a legitimate form of pressure. In support of this proposition it was submitted that the circumstances described did not:
show an independent assessment of the merits of entering into the agreement … It doesn’t show appropriate attention to independent and proper criteria to enter into the agreement, and it’s replete with psychological and emotional issues as between the two parties to the relationship for entering into the agreement.
101Counsel for the husband submitted that the first question is whether the pressure alleged had, in fact, been applied to the husband to enter into the agreement and the second question was whether such pressure went beyond what the law would countenance as legitimate. In the event that the pressure went beyond what the law would countenance as legitimate, counsel submitted that this would amount to unconscionable conduct. This apparent blurring by counsel for the husband of the concepts of duress and unconscionable conduct reflects the language employed by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking Corporation (at 46). This is not an appropriate occasion, especially given the absence of argument on the point, to attempt to embark on an examination of authorities both supporting and criticising the terminology employed by McHugh JA. See for example ANZ Bank vKaram (2005) 64 NSWLR 149, where the New South Wales Court of Appeal concluded that duress should be limited to threatened or actual unlawful conduct.
102For present purposes, I am prepared to proceed on the basis that the claim of duress would be made out in the event it were to be established that the wife applied pressure that was “illegitimate”. It is, nevertheless, important to recognise the difference between the illegitimate or unconscionable pressure which leads to a finding of duress and that which leads to a finding of unconscionable conduct.
103Davies J helpfully discussed the intersection between the two concepts in Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1997] FCA 1107 where he said:
… To vitiate consent, the duress or compulsion must be of such a nature, illegitimate or unconscionable, as of itself to vitiate consent. The equitable principle of unconscionable conduct as illustrated in [Commonwealth Bank of Australia Ltd v Amadio] requires rather the unconscientious taking advantage of a person in a position of special disability or special disadvantage. Although the term “unconscionable” is used in both principles, it has in each a somewhat different operation. In the equitable principle, the term “unconscionable” refers to the nature of the advantage taken of a person in a position of disability or special disadvantage. For the purposes of … duress, the term “unconscionable” looks rather to nature of the duress or compulsion exercised, to its legitimacy or illegitimacy …
104Although, as I have said, counsel for the husband seemed to advance the first limb of his argument under the banner of duress rather than undue influence, it is important also to recognise the different requirements in cases said to involve undue influence and those said to involve unconscionable conduct. As was explained by Mason J in Commonwealth Bank of Australia v Amadio (1983) 151 CLR 447 at 461, in cases of undue influence “the will of the innocent party is not independent and voluntary because it is overborne” (or, it might be added, “deflected”), whereas in cases of unconscionable conduct:
… the will of the innocent party even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position … Though not deprived of an independent and voluntary will, [the innocent party] is unable to make a worthwhile judgment as to what is in his best interest.
105There can be no doubt that the wife applied pressure to the husband, as explained in my findings set out above. But did this go beyond what was legitimate? I am not persuaded that it did. As Lords Wilberforce and Simon of Glaisdale said in Barton v Armstrong at 121 in dealing with a claim that although there was apparent consent, there was no true consent, as the agreement was not “voluntary”:
This involves consideration of what the law regards as voluntary; or its opposite; for in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate.
106Parliament has now overruled the public policy considerations which previously stood in the way of binding agreements between prospective spouses by legislating so as to give legal effect to such agreements, subject to certain conditions. Marriage is, of course, a contract as well as a status. It follows that Parliament contemplated that a party to a prospective marriage could require, as a term of the marriage contract, that the other party enter into a financial agreement. A requirement that the other party enter into such an agreement prior to marriage therefore cannot, in itself, constitute illegitimate pressure. The husband could, at any time, have left the relationship or refused to marry the wife. When the second agreement was presented to him, the husband knew he had a choice and, no doubt having weighed his options and having had legal advice, elected to execute it.
107It is true the wife drove what the husband might consider a hard bargain, but this was not reflective of any illegitimate pressure, rather it reflects the fact that the wife had acquired assets of some substance which she was keen to retain for her own benefit in the event the marriage ended. It is also worth observing that, unlike other cases where a claim of duress has succeeded, the agreement here did not involve any disposition of funds or property by the husband in favour of the wife – the main consideration offered by the husband (save for his hand in marriage) was the abandonment of a potential claim against assets which the wife owned outright and to which he had made no contribution. It is true that the husband would appear to have given up his entitlement to make any claim arising out of any improvements he might make to the wife’s assets, but on the other hand the agreement imposed no obligation on him to make any such improvements.
108It should also be recorded that the suggestion the husband was under duress to execute the agreement does not sit well with the strong tone adopted in the correspondence sent by his solicitor to the wife’s solicitor seeking amendments to the form of agreement originally proposed by the wife.
109I am therefore not persuaded that any basis has been established to show that the husband was subjected to duress. To the extent that the husband may have relied upon undue influence, the findings I propose to make when dealing with the claim of unconscionable conduct would also adequately deal with that issue.
Unconscionable conduct
110The following convenient statement of the elements required to demonstrate unconscionable dealing is taken from Turner v Wendever [2003] NSWSC 1147 at [105] where Austin J accepted that such cases involve the following (my emphasis):
(a)the weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-à-vis the stronger party;
(b)the special disadvantage must seriously affect the weaker party’s capacity to judge or protect his or her own interests;
(c)the stronger party must know of the special disadvantage (or know of facts which would raise that possibility in the mind of any reasonable person);
(d)that party must take advantage of the opportunity presented by the disadvantage; and
(e)the taking of advantage must have been unconscientious.
111The transaction will be treated as unconscientious “only if the party seeking to enforce [it] has taken unfair advantage of his or her superior bargaining power, or of the position of disadvantage in which the other party was placed” (Commercial Bank of Australia v Amadio per Gibbs CJ at 459).
112The task of a trial judge dealing with a claim of unconscionable conduct has been recently elucidated by the High Court in Kakavas v Crown Melbourne Ltd (2013) 298 ALR 35 at 39 in these terms:
[18] The invocation of the conscience of equity requires “a scrutiny of the exact relations established between the parties” to determine “the real justice of the case”. Where an appeal is made by a plaintiff to the standards of equity embodied in the Amadio principle, the task of the courts is to determine whether the whole course of dealing between the parties has been such that, as between the parties, responsibility for the plaintiff's loss should be ascribed to unconscientious conduct on the part of the defendant.
113I accept the submission of senior counsel for the wife that the evidence simply did not support any finding of unconscionable conduct. Although the husband may be seen as being at a disadvantage in his negotiations/discussions with the wife, there was nothing “special” about that disadvantage. Instead, it was reflective of nothing more than that the wife was a woman of some financial substance, whereas the husband had not yet acquired any assets. The wife seems to me to have been as anxious to marry as was the husband. She too wanted a family. But she had legitimate interests to protect and was not prepared to proceed with the marriage unless they were protected.
114It is important also to recognise that the factors said to constitute the “special disadvantage” must not be examined in isolation from the other circumstances of the impugned transaction. Instead, the question of special disadvantage must be considered as part of the broader question, which is whether the agreement was procured by the wife taking advantage of some inability on the husband’s part to make worthwhile decisions in his own interests, which inability was sufficiently evident to the wife as to render her conduct exploitative (Kakavasv Crown Melbourne Ltd at [124]). Even if it were established that the husband was in some position of special disadvantage, the comments I made in the context of considering the duress argument would still apply, and it could therefore not be said that the wife, in protecting her own assets, acted in a way that was “exploitative”. See in this context Radmacher (formerly Granatino) v Granatino at [79] and [170].
115In his closing submissions, counsel for the husband sought, for the first time, to rely upon a disparity in the level of education and training of the husband and wife as contributing to the special disadvantage of the husband. Although it appears that the wife enjoyed a higher level of education than the husband, he presented as a person of at least average intelligence, well able to conduct his own affairs and look after his own interests. He also had what I will later find to be independent legal advice.
116Although no mention at all was made of it in the husband’s particulars, his counsel at trial endeavoured to support his argument by placing emphasis on the fact that the wedding date had been set at the time the husband signed the agreement. The only evidence the husband led about the arrangements for the wedding (and this came in his oral evidence, not in his affidavit) was that he and the wife had “paid for restaurants and everything”. This, in itself, did not put the husband into any position of “special disadvantage”, especially as I consider it likely that the wife would have paid for the restaurant and hence would be the person who would have suffered loss if a cancellation resulted in forfeiture of any deposit.
117I am not prepared to rule out the possibility that there may be circumstances in which a refusal to proceed with a marriage without execution of a financial agreement may constitute unconscionable conduct (especially within a potentially extended meaning of that term in the Act), or duress, where the late abandonment of the wedding would cause significant hardship, embarrassment or emotional stress (Fletcher v Fletcher 628 N.E.2d 1343, 1348 (Ohio 1994) – but see De Lorean v De Lorean 511 A.2d.1257 (N.J. Super. Ch 1986) and In Re Marriage of Spiegel, 553 N.W.2d 309, 318 (Iowa 1996)). I recognise, however, that any attempt to deal with such circumstances under the rubric of unconscionable conduct would need to address the fact that the common characteristic in cases where equity has been prepared to intervene is that one party was at a special disability vis-a-vis the other party (Blomley v Ryan (1956) 99 CLR 362 at 405).
118In the present case, the wife had made known throughout the relationship that she would not be prepared to marry the husband unless he entered into a financial agreement. There was no last minute fait accompli delivered at the door of the church or registry office. There was no evidence to support a finding that the husband would suffer significant hardship, embarrassment or emotional stress in the event that he had declined to sign the agreement.
119In dealing with this part of the husband’s claim, I accept that there is strong authority for the proposition that equity will intervene in cases where one party to a transaction is under a special disability due to a strong emotional attachment. One such case was Louth v Diprose (1992) 175 CLR 621, where the High Court upheld the decision of a trial judge who found that the appellant had engaged in unconscionable conduct, having “deliberately manufactured” a false “atmosphere of crisis” in order to influence the respondent to provide money to purchase a home in her name, claiming that she would otherwise be forced to vacate the home, which in turn would lead to her committing suicide. The trial Judge found that the appellant obtained the funds from the respondent by “a process of manipulation to which [the respondent] was utterly vulnerable by reason of his infatuation” and further found that the appellant’s conduct “smacked of fraud”.
120As Deane J said at 637 in the High Court in Louth v Diprose:
It has long been established that the jurisdiction of courts of equity to relieve against unconscionable dealing extends generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that special disability was sufficiently evident to the other party to make it prima facie unfair or “unconscionable” that that other party procure, accept or retain the benefit of, the disadvantaged party’s consent to the impugned transaction in the circumstances in which he or she procured or accepted it …
The adverse circumstances which may constitute a special disability for the purposes of the principle relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible of being comprehensively catalogued …
121Importantly, Deane J went on at 638 to note that the case before the court:
… was not simply one in which the respondent had, under the influence of his love for, or infatuation with, the appellant, made an imprudent gift in her favour. The case was one in which the appellant deliberately used that love or infatuation and her own deceit to create a situation in which she could unconscientiously manipulate the respondent to part with a large proportion of his property. The intervention of equity is not merely to relieve the plaintiff from the consequences of his own foolishness. It is to prevent his victimisation …
122I accept that “it is an oversimplification to say that because the [husband] acted as he did with his eyes open, and with a full understanding of what he was doing, he was not in a position of disadvantage, and therefore not the victim of unconscionable conduct” (Jacobs A-CJ in Diprose v Louth (No.2) (1990) 54 SASR 450 at 453, cited with approval by Gaudron, Gummow and Kirby JJ in Bridgewater v Leahy (1998) 194 CLR 457 at 490). Nevertheless, the circumstances of the present case fall far short of those found to exist in Louth v Diprose. Here, the wife was at all times “up front” with the husband about her conditions for the continuation of the relationship. She did not ask him to part with any money or property. She did not deceive him with a view to manipulating him. On the contrary, she was brutally frank. Nothing in the facts provides any support for the propositions advanced by the husband. His assertion of unconscionable conduct fails.
123Given the findings I have made, it is unnecessary to consider whether or not the fact the husband received independent legal advice would be an adequate rebuttal of the claims of duress, undue influence or unconscionable conduct – as to which see Powell v Powell [1900] 1 Ch 243 at 246 and Wilkinson v ASB Bank Ltd [1998] 1 NZLR 674 at 695.
Is the agreement binding within the meaning of the Act?
124Having found there is no basis to set aside the agreement under s 90K(1), I now turn to the second question of whether the agreement is binding within the meaning of the Act.
The onus of proof
125It was properly common ground that the wife carries the burden of establishing that the agreement was binding. The only controversy was the weight to be given to the solicitors’ certificates in discharging that burden.
126Senior counsel for the wife contended that the production into evidence of the certificates should be treated as casting a forensic obligation on the party disputing the accuracy of the certificates to adduce evidence to throw into doubt the conclusion that otherwise would be drawn from the certificates. His analysis was consistent with what I later said in Hoult & Hoult (at [62] – [63]), with which the majority agreed at [254].
127The contrary argument of counsel for the husband concerning the “conclusionary” nature of the solicitors’ certificates, relying for authority on the remarks of Murphy J at first instance in Hoult & Hoult (2011) FLC 93-489, must now be rejected in light of the successful appeal against his Honour’s decision. For the same reason, I also reject the husband’s argument that the wife needed to establish precisely what advice had been given.
The requirements to be met to ensure the agreement is binding
128The next issue is to identify what must be established prior to the Court being able to find that the agreement was binding within the meaning of the Act. The answer to this question at the time of trial was greatly complicated by uncertainty concerning the meaning and validity of amendments made by the 2009 amending Act, which were expressed to have retrospective operation.
129The primary position of senior counsel for the wife, both at trial and in his submissions after delivery of the Full Court’s judgment in Hoult & Hoult was that:
… all that is necessary [for the wife] to discharge the legal burden of proof in relation to the requirements as to legal advice [given to the husband] is that the agreement should contain a statement that the husband was provided, before it was signed, with the legal advice prescribed at the time and that there is a certificate annexed to it from the person who provided that advice saying that it was provided. If those requirements are satisfied … that is, conclusive of the binding nature of the agreement, subject to the other requirements of s90G (as it was in force at the time) being fulfilled.
130Senior counsel for the wife therefore did not accept the proposition I had advocated in Hoult & Hoult that for an agreement to be binding, each party must have actually been provided with the prescribed legal advice. Senior counsel properly drew attention to the fact that my view had been rejected by Strickland and Ainslie-Wallace JJ, who constituted the majority in Hoult & Hoult. Senior counsel also submitted that it was not the intention of Parliament “to make agreements that were binding when they were made (because they had met the requirements at the time they were made) no longer binding and so expose the parties to claims” – and he submitted that, on its true construction, the legislation did not have that effect.
131In support of this potentially attractive argument, senior counsel cited this proposition from the 9th edition of Craies on Legislation:
It is a fundamental rule of English law that no statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such a construction.
132Senior counsel continued his examination of the 2009 amending Act by saying (footnotes omitted):
To make agreements that were binding no longer binding would be such an unusual and far-reaching legislative interference with existing rights that it would require clear and specific provisions in the legislation as to that specific retrospective effect, and one would certainly expect the Explanatory Memorandum to mention it, because unless the contrary intention appears, an enactment is presumed to govern current activities and not to be intended to have retrospective operation.
133Senior counsel also noted that the relevant Explanatory Memorandum had recorded the opinion of the Family Law Council that the amendments contained in the amending Act were “required to restore confidence in the binding nature of these agreements”. He then drolly but, in my view, perceptively observed:
One would be very surprised if the Family Law Council thought that making agreements that were binding no longer binding would do anything to restore confidence “in the binding nature of these agreements” because plainly it would do no such thing.
134By reference to other parts of the Explanatory Memorandum (paragraphs 68 and 73), senior counsel submitted that the clear intention of Parliament in enacting the 2009 amendments:
was to relax requirements about evidence, not to make previously binding agreements no longer binding [and to] … support agreements that had been made, even if there were technical errors in them – so as to avoid people avoiding or getting out of their agreement on a “mere technicality”.
135Senior counsel for the wife ultimately contended that the effect of the 2009 amending Act was that there were two ways in which the agreement could be found to be binding. The first formulation he advocated was the version that was actually in force at the time the agreement was executed.
136At the time the agreement was signed, the applicable form of s 90G(1) (i.e. after the 2003 amendments) was as follows:
90G When financial agreements are binding
(1) A financial agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is signed by both parties; and
(b) the agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(d) the agreement has not been terminated and has not been set aside by a court; and
(e) after the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.
137It should be observed, however, that reliance by senior counsel for the wife on the version of s 90G(1) in place at the time of execution of the deed did not advance the wife’s cause since neither the deed, nor the certificates executed by the solicitors, complied with the legislation in its amended form. Instead, they dealt with the requirements as set out in the Act prior to the 2003 amendments.
138The second formulation advocated by senior counsel was in the following form (the remarks in italics formed part of senior counsel’s commentary):
90GWhen financial agreements are binding
(1)Subject to subsection (1A), a financial agreement is binding on the parties to the agreement, if and only if:
(a)the agreement is signed by both 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)the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
This provision remains as enacted by Sch 2 of the Family Law Amendment Act 2000 because item 8(6) of Sch 5 of the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 disapplies the s90G(1)(c) inserted by item 2.
(d)the agreement has not been terminated and has not been set aside by a court; and …
139The careful argument of senior counsel explaining his interpretation of the effect of the amendments would ordinarily bear repetition. However, given that the Full Court has now ruled on the topic, it seems to me unnecessary to comment in any detail on the argument advanced. I consider it sufficient to say that:
•while senior counsel for the wife fulminated against the evils of retrospective legislation, the 2009 amending Act makes clear that it has retrospective effect;
•given that the agreement and the certificates were not compliant with the legislation that applied at the time of execution of the agreement, the wife herself needed to rely upon the retrospective effect of the amendments;
•the only question therefore related to the proper interpretation of the way in which Parliament chose to bring about that retrospective effect.
140Counsel for the husband did not accept the construction of the 2009 amending Act proposed by senior counsel for the wife. He submitted that the alternative formulations proposed by Murphy J in Senior & Anderson (2011) FLC 93-470 at [189] should be preferred. I do not propose to set those out here, it being sufficient to observe that both formulations required proof that the requisite advice was given and both required the existence of a signed statement by the solicitors confirming that it had been given. This was in contrast with the formulations of senior counsel for the wife, only one of which required proof that the requisite advice was in fact given.
141The resolution of this controversy by the Full Court in Wallace & Stelzer is binding on me, as the agreement in the present matter was entered into in the same time period as the agreement in that case (i.e. after the 2003 amendments and before the commencement of the 2009 amending Act). Although the decision is now under challenge in the High Court, I am obliged to apply the law as laid down by the Full Court until such time as the High Court determines otherwise.
142The certificates signed by the parties’ solicitors in Wallace & Stelzer suffered from the same defect as in the present matter in that they recorded that advice had been given about the four matters that were prescribed prior to the 2003 amendments coming into effect. However, the deed itself in Wallace & Stelzer contained a recital to the effect that the parties had received advice on the two matters prescribed following the 2003 amendments. Notwithstanding that the deed itself was compliant, the requirements of the legislation were not met because of the defect in the certificates.
143The trial Judge in Wallace & Stelzer found that the 2009 amendments had the effect of curing the defects in the certificates, and were constitutionally valid notwithstanding their retrospective effect. Both of these findings were upheld by the Full Court.
144In resolving the controversy concerning the way in which the amendments should be applied to agreements entered into before the commencement of the 2009 amending Act, the Full Court in Wallace & Stelzer explained the meaning of the crucial words “as in force during that period”, which were the focus of the submission of senior counsel for the wife in the present matter. These words appear in item 8A(2) of Schedule 5 to the 2009 amending Act; however, to assist understanding of the way in which the Full Court arrived at its decision it will also be helpful to set out the text of other relevant provisions, namely items 2, 8(1), 8(6) and 8A(3):
2 Paragraphs 90G(1)(b) and (c)
Repeal the paragraphs, substitute:
(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
8 Application
(1) The amendments made by items 1A to 7A apply in relation to financial agreements, and termination agreements, made on or after 27 December 2000.
…
(6) For a financial agreement made before the commencement of this item, paragraphs 90G(1)(c) and (ca) of the Family Law Act 1975, as inserted by item 2 of this Schedule, do not apply.
8A Transitional—agreements made on or after 14 January 2004 and before commencement
…
(2) Paragraph 90G(1)(b) of the Family Law Act 1975, as in force during that period, is also taken to be satisfied in relation to a spouse in relation to the agreement if, before signing the agreement, the spouse party was provided with independent legal advice from a legal practitioner about:
(a)the effect of the agreement on the rights of that party; and
(b) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
(c) whether or not, at that time, it was prudent for that party to make the agreement; and
(d) whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(3) Paragraph 90G(1)(c) of the Family Law Act 1975, as inserted by this Act, applies in relation to the agreement as if the reference in that paragraph to the advice referred to in paragraph (b) included a reference to the advice referred to in subitem (2) of this item.
145The Full Court in Wallace & Stelzer first dealt with the proposition that there is inconsistency between items 8(1) and 8A(2). It disposed of that argument in the following paragraphs.
62.It is apparent that both items 8(1) and 8A(2) apply to financial agreements made on or after 14 January 2004 and before commencement of the 2009 amendments. In his challenge to the operation of the amendments as they relate to agreements entered into in that period, senior counsel for the husband first focused on the effect of the words “as in force during that period” in item 8A(2) on the operation of s 90G(1)(b). He submitted that the failure to use the same words used in items 8(6) and (7) and item 8A(3), namely, “as inserted by this Act”, evidenced a deliberate intention against application of the new s 90G(1)(b) to such agreements. That is, the literal meaning of the words in item 8A(2) is that for such an agreement to be binding, s 90G(1)(b) as in force between 14 January 2004 and 3 January 2010 must be complied with. However, given that by item 2 of Schedule 5 that provision was repealed and by item 8(1) the new s 90G applies to all financial agreements the two outcomes are incompatible, and according to senior counsel for the husband both must be struck down as “invalid”.
63. The words “is also” in item 8A(2) (which were relied on by the Attorney-General) were said not to help either and do no more than apply s 90G(1)(b) as it operated before 14 January 2004 to agreements entered into between 14 January 2004 and 4 January 2010.
64. The Attorney-General submitted that there were two possible constructions of item 8A(2) against the background of item 8(1). The construction preferred by the Attorney-General springing from the legislative intention, is that the words “as in force during that period” is a drafting error which should be rectified by their replacement with “as inserted by item 2 of this Schedule”. Although we agree this would accord with the legislative intention, we are not satisfied that this construction is required to overcome the inconsistency between item 8(1) and item 8A(2).
65. The second construction offered by the Attorney-General to overcome this inconsistency is that the use of the words “is also taken to be satisfied” in item 8A(2) points to the relationship between item 8(1) and item 8A(2), being that item 8A(2) operates in addition to item 8. This is consistent with the explanation contained in the supplementary explanatory memorandum that the new item 8A “will provide for additional circumstances”. This is the construction which we prefer. Construed in this manner there is no inconsistency between items 8(1) and 8A(2). It can also be seen that the amendments build upon each other and operate harmoniously.
146The conclusion reached by the Full Court at [65] corresponds with the submission made before me by counsel for the husband.
147Importantly, the Full Court then went on to consider two other, seemingly irreconcilable, provisions in the legislation concerning the requirement for certificates/statements signed by the parties’ legal advisors. It will be recalled that, prior to the 2009 amending Act, it was necessary for certificates to be annexed to a financial agreement, signed by the solicitors who had provided legal advice to each party stating the advice that had been provided. The 2009 amending Act removed this requirement and instead now requires that each party be provided with a signed statement by the legal practitioner stating that the requisite advice was given, and a copy of the statement must be given to the other party. The difficulty with the 2009 amending Act was that while item 8(6) expressly provided that these new requirements did not apply to a financial agreement entered into before the commencement of the 2009 amending Act, item 8A(3) purported to prescribe how these new requirements could be met in the case of such agreements. The provisions seemingly could not both stand.
148Murphy J had grappled with this dilemma in Senior & Anderson and accepted that one or other of the provisions had to be treated as having no effect, leading him to formulate the two alternative versions of s 90G discussed above. The Full Court in Wallace & Stelzer agreed that one of the provisions had to be treated as having no effect, but decided that it was item 8A that should be treated in this way, as appears from the following paragraphs of the reasons:
66. There is no doubt that a literal reading of item 8(6) and item 8A(3) results in legislative provisions which are ambiguous and mutually inconsistent, as was common ground. First, item 8A(3) provides that in relation to an agreement executed between 14 January 2004 and before 4 January 2010, the new s 90G(1)(c), which requires signed statements from the legal advisers, will apply. Read in this manner, item 8A(3) is in conflict with item 8(6) which provides that the new s 90G(1)(c) does not apply to financial agreements made before the commencement of the 2009 amendments.
67. Secondly, the ordinary reading of item 8A(3) appears to retrospectively apply to s 90G(1)(c) (but not s 90G(1)(c) and (ca)) as amended by the 2009 amendments. This would result in the retrospective imposition of a requirement which did not apply at the time an agreement was entered into, i.e. the provision of a statement that the required legal advice had been provided to the parties to the agreement. Yet, it is clear that the purpose of item 8A is to offer a solution for parties who after the 2003 amendments commenced, used certificates which operated before the date, and the retrospective imposition of an additional requirement would be entirely at odds with this purpose.
68. It was argued by the Attorney-General that the provisions evidence a drafting error which could largely be resolved if they are construed in a manner consistent with the language and purpose of all the provisions of the statute (Project Blue Sky Inc v Australian Broadcasting Authority; Minister for Immigration and Citizenship v SZJGV). In support of this argument, senior counsel for the Attorney-General compared items 8(6) and 8(7). It will be recalled that item 8(6) excluded the new ss 90G(1)(c) and (ca) to agreements made before the commencement of the 2009 amendments. Item 8(7) also operates retrospectively so that the new s 90G(1A)(b) is the only provision to which reference is made. In other words, these items do precisely the same thing; item 8(6) says that the new ss 90G(1)(c) and (ca) do not apply and item 8(7) says that for the purpose of s 90G(1A) there is to be no reference to ss 90G(1)(c) and (ca). We agree with the Attorney-General that this reinforces the view that item 8A(3) is a drafting error.
69. We agree with senior counsel for the Attorney-General that the proper construction of the provisions is that item 8A(3) has no effect and is to be read as being omitted.
70. Without expressly saying so, the trial judge agreed with the Attorney-General that item 8A(3) achieved an incongruous result and should be read as having no effect.
71. Before leaving this topic, we mention that in Senior & Anderson(2011) FLC 93-470, Murphy J offered a possible interpretation of the inconsistency between items 8(6) and 8A(3). Before us senior counsel for the Attorney-General (with whom counsel for the other parties agreed) submitted that his Honour’s interpretation could not be accepted in that the effect of item 8(6) was ignored and effect given to item 8A(3) only. As senior counsel for the Attorney-General demonstrated, it is item 8(6) rather than item 8A(3) to which effect should be given.
149My understanding is that it is this aspect of the decision of the Full Court in Wallace & Stelzer which is presently under challenge in the High Court. In the meantime, until the High Court says otherwise, I am greatly assisted by paragraph 72 of the decision where their Honours in the Full Court helpfully set out the practical effect of their interpretation of the legislation:
… the agreement in this case would be a binding financial agreement on the basis of either of the following two approaches:
(1)By the application of item 8, in that pursuant to 8(1) the agreement complied with ss 90G(1)(a), (b) and (c) as inserted by the 2009 amendments because:
• the agreement was signed by all parties;
•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;
•the agreement has not been terminated and has not been set aside by a court;
and pursuant to item 8(6) it was unnecessary for the requirements of ss 90G(1)(c) and (ca) concerning legal advisers’ certificates to be met.
(2)By the application of item 8A in that the agreement complied with the requirements of sub-item 8A(2) because the parties had been provided with legal advice about the following matters as specified in that sub-item, being:
• the effect of the agreement on the rights of that party;
•whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement;
•whether or not, at that time, it was prudent for that party to make the agreement;
•whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable;
and there was no necessity for compliance with sub-item 8A(3).
150It will be seen that, in each of these alternatives, it must be established that each party received independent legal advice before it can be held that the agreement is binding. It will also be seen that in neither alternative is there any requirement to establish that the solicitors signed a certificate/statement concerning the advice provided. The latter point was emphasised by the Full Court in Wallace & Stelzer at [100], where their Honours said that because neither of the alternatives “requires a certificate or solicitor’s statement, the solicitors’ certificates might be considered irrelevant” (although their Honours went on to point out that the certificates that had originally been a mandatory requirement could still be relied upon as evidence that each party received legal advice).
151In Hoult & Hoult I had this to say about the 2009 amendments and what I regarded as the necessity for proof that each party had actually received legal advice, even though at the time of the agreement was signed there was no express obligation for such advice to be given:
16. When first enacted, s 90G did not expressly require that each party to the agreement have independent legal advice. Instead, it required that the agreement must contain a statement that each party had been provided with such advice, the nature of which was prescribed. It was also obligatory for the agreement to have certificates annexed, signed by the legal advisors, stating that the advice had been given.
17. Section 90G was amended by the Family Law Amendment Act 2003 (Cth), but the section still did not contain an express requirement for each party to receive legal advice. The requirement for the agreement to contain a statement to the effect that each party had been provided with legal advice was retained; however, there were changes to the matters about which advice was required. The requirement for certificates from the solicitors to be annexed to the agreement remained.
18. The Full Court considered s 90G in Black & Black (2008) FLC 93-357 and concluded that strict compliance with s 90G was obligatory for a financial agreement to be binding.
19. Section 90G was again amended by the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) (“the 2009 amending Act”), which aimed to overcome problems in the Act exposed by Black & Black. Put briefly, the intention was to ensure a party could not avoid an agreement based on what was described as “a mere technicality”. The amendments had prospective and retrospective effect.
20. In its amended form, s 90G now requires that each party must have been provided with prescribed legal advice before signing the agreement. It is insufficient that a party was provided with a statement from their lawyer stating that the advice was given, or even that a copy of such a document was given to the other party (although these were made obligatory requirements). If the requisite advice was, in fact, not provided, the agreement is not binding. Crucially, however, this proposition is subject to s 90G(1A).
…
22. The retrospective application of the 2009 amendments is not without complication, but does not require discussion as it is not the subject of controversy here. It is sufficient to say it is accepted that, for an agreement to be binding, each party must have been provided with the prescribed advice, even though that may not have been a requirement when the agreement was executed (albeit it was clearly expected that advice would have been given prior to lawyers certifying it had been).
23. This subtle change in the Act leaves all agreements open to challenge on the basis of absence of the prescribed legal advice, even though the lawyers have exchanged statements certifying the advice was given.
152The majority in Hoult & Hoult (Strickland and Ainslie-Wallace JJ) did not agree with my view concerning the necessity for proof that the legal advice was in fact given, as appears from the following paragraph in their judgment:
252. We do not need to repeat the factual background which is adequately set out by Justice Thackray, but as to the legislative background, although we agree generally with his Honour’s summary, and in particular that the retrospective application of the 2009 amendments is not without complication, in our view it is not correct to say that the changes made to the Act in 2009 left “all agreements open to challenge on the basis of absence of the prescribed legal advice”. The transitional provisions contained in Schedule 5, Part 1 of the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 (Cth) are intended to address this, and other similar issues. However, there are questions as to the meaning and construction of certain of these transitional provisions which cast some doubt on that intention. We do not propose to delve into that issue in this appeal though, not only because it is unnecessary to do so, but because we are aware that that issue is being considered by another Full Court.
153As their Honours said, the meaning of the transitional provisions was, at that point, being considered in another case by another Full Court. The case to which their Honours referred was Wallace & Stelzer. With respect to the majority in Hoult & Hoult, the decision of the Full Court in Wallace & Stelzer (to which Strickland J was a signatory) would appear to confirm the view I expressed in Hoult & Hoult that the effect of the 2009 amendments is to leave all agreements open to challenge on the basis of the absence of legal advice. This is so, notwithstanding that at the time the agreements were executed there was no requirement for legal advice to be given, but only a requirement for a certificate to be attached to an agreement saying that such advice had been given. While it has no doubt always been assumed that a solicitor would only sign a certificate saying advice had been given if in fact the advice had been given, experience now establishes that this was a naïve assumption.
154As the Full Court said in Wallace & Stelzer at [67], “the retrospective imposition of an additional requirement [for an agreement to be binding] would be entirely at odds” with legislation designed to offer a solution to parties whose agreements were not binding as a result of “technical difficulties”. Nevertheless, I maintain the view that the effect of the 2009 amendments is that an additional requirement has been imposed. Hopefully, this will not lead to difficulties in most cases, since it will be common ground that the solicitors gave the advice they certified they gave. The present case, however, is a good illustration of the difficulties that can arise where this is not accepted.
Did the husband receive the prescribed advice?
155I am satisfied that the husband read the deed after it had been signed by the wife and would have read at least those provisions which were thereafter amended. The document records the husband’s acknowledgement that he had received the advice which Mr P says he provided (save for the issue earlier mentioned about whether it was “prudent” to enter into the agreement). His own acknowledgement, combined with the terms of the certificate and my acceptance of Mr P’s evidence, satisfies me that the husband received advice which, as a result of the 2009 amendments, now complies with the Act. (I am entitled to take into account the words used in Recital F as an admission of a matter of fact and as evidence against the husband of the truth of the matters there stated (Wallace & Stelzer at [110]).
156My finding that the husband received legal advice renders it unnecessary for me to consider the argument of senior counsel for the wife to the effect that the wife was entitled to rely upon the certificate signed by the husband’s solicitor and that, as the husband was seeking equitable relief, it was not open to him to rely on his own wrongdoing. This proposition, however, would need to overcome the fact that s 90G(1) provides that an agreement will be binding, if and only if, all of the matters referred to in the section are established. A party who asserts that one of the statutory pre-conditions has not been met is not seeking “equitable relief”. If one of the preconditions has not been met, there is no element of discretion involved as there is, for example, where one of the conditions in s 90K(1) has been established – unless of course s 90G(1A) and s 90G(1B) are successfully invoked. See in this regard the learned discussion of Murphy J in Fevia & Carmel-Fevia (2009) FLC 93-411.
Was the husband’s advice independent?
157I am satisfied the advice given by Mr P was “independent”. The proposition to the contrary was based entirely on the former professional association between the wife’s sister and Mr P, with the added suggestion of something sinister arising out of the fact that Mr P had been the subject of disciplinary proceedings.
158I have already given my assessment of Mr P. Based on that assessment, and having regard to his correspondence seeking amendments to the agreement, I am satisfied he had no conflict of interest, was entirely independent and acted in accordance with the husband’s interests, given the husband’s instructions that he wanted to proceed with the agreement.
159Counsel for the husband properly conceded in his closing address that even if the wife’s sister had selected and appointed Mr P, that would not get the husband “very far” and did not go to the independence of the advice the husband received. He nevertheless submitted that the alleged selection and appointment of the husband’s solicitor by the wife’s sister was part of the “entire matrix of circumstances in which the agreement was executed”. By this, I understood counsel for the husband to be relying upon the alleged appointment of Mr P by the wife’s sister as advancing the proposition that there had been unconscionable conduct. I have already determined that there was no such conduct. In any event, the mere recommendation and making of an appointment by one party for the other party, without more, does not lead to a conclusion that the advice given was anything other than independent: Ribchenkov v Suncorp-Metway Ltd (2000) 175 ALR 650 at [69].
160Furthermore, as Hoffman LJ said in Bank of Baroda v Rayarel [1995] 2 FLR 376 at 386:
If a prospective surety deals with a bank through a solicitor, the bank is entitled to assume that the solicitor has given her appropriate advice. If there is a possibility of a conflict of interest between the surety and the other parties whom the solicitor is also advising, the bank is entitled to assume that the solicitor will have told her that she was entitled to take independent advice. The bank’s legal department is not obliged to commit the professional discourtesy of communicating directly with the solicitor's client and tendering such advice itself. Nor is it obliged to inform the solicitor of his professional duties. This will be a fortiori the case when the documents submitted by the bank to the surety’s solicitor contain a certificate that she has been advised of the effect of the document and her right to have independent legal advice …
161Thus, in the present case, the wife was entitled to proceed on the basis of an assumption that if Mr P perceived there was any conflict of interest, he would advise the husband accordingly.
Did the wife receive the prescribed advice?
162It is not in doubt that the wife received the prescribed advice in relation to the form of the agreement she signed on 29 January 2004 and that the advice was “independent”. The only issue is whether she received the prescribed advice in relation to the final form of the agreement. I accept that it is necessary that the advice given should be in relation to the final version of the document signed by the parties since there is no “agreement” until the parties are ad idem following the making of an offer by one and the communication of the acceptance of it by the other (see Murphy J’s discussion in Parker and Parker (2012) 260 FLR 284 at 319-320).
163I have already indicated I accept that the wife’s sister discussed the amendments with her when they were proposed by the husband’s solicitor. In my view, it is inconceivable that the wife’s sister did not advise her in relation to the requested amendments and I find that she did. There would certainly be no need for the wife’s sister to have repeated all over again the advice she had previously given about the substantive effect of the agreement. As I understood his submissions, counsel for the husband conceded that the requisite advice could be “cumulative”. Accordingly, when the request came for the agreement to be amended, all that would have been required would be to draw the amendments to the attention of the wife, noting that the husband required them to be made prior to him executing the agreement. It needs to be appreciated that the amendments were straightforward and that the wife is an intelligent woman (she was a [medical professional] conducting her own business and is now enrolled as a law student) and would have well understood the effect of the two amendments proposed by the husband.
164While the certificate signed by the wife’s sister could not have related to advice given concerning the agreement in its amended form, it will be remembered that the Full Court has made clear in Wallace & Stelzer that such certificates, at least in cases such as the present, are now “irrelevant”, save for their evidentiary value. The focus for agreements entered into prior to the commencement of the 2009 amending Act is not on the certificate but on the advice that was actually given. I am satisfied the required advice was given.
165As to the timing of the advice, I accept it has to be established it was given before the agreement was signed. It is common ground the wife signed the agreement before the amendments were made, but it was not in dispute that she initialled the amendments which were subsequently made (even though I have difficulty recognising her initials on the document itself). The wife’s “signing” of the agreement within the meaning of the Act was therefore only completed when she initialled the amendments. Hence, advice given by the wife’s sister after 29 January 2004, when she signed the original document, up until the time she initialled the amendments, would be advice that could also be considered in determining that the statutory requirements were satisfied.
Conclusion
166I have found that both parties received the requisite legal advice prior to signing the agreement and that the advice received was independent. Absent any other vitiating factor, I conclude that the agreement is binding within the meaning of the Act.
I certify that the preceding [166] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate