Whatley & Whatley
[2007] FamCA 1671
•23 November 2007
FAMILY COURT OF AUSTRALIA
| WHATLEY & WHATLEY | [2007] FamCA 1671 |
| FAMILY LAW – PROPERTY SETTLEMENT – FINANCIAL AGREEMENT – Agreement made in 2005 styled “Section 90C Financial Agreement” found not to be a binding financial agreement under s 90G Family Law Act 1975 (Cth) – The requisite certificate guaranteeing legal advice had been obtained contained in the agreement was in accordance with the previous, but not current, version of s 90G Family Law Act 1975 (Cth) – Intention of Legislature requires strict compliance with the provision – Consequential to the deliberate alteration of the provision by the Legislature, the financial agreement is not a binding financial agreement under Part VIIIA Family Law Act 1975 (Cth) – Section 15AA Acts Interpretation Act 1901 (Cth), explanatory memorandum in relation to the change in s 90G and J & J [2006] FamCA 442 discussed |
| Family Law Act 1975 (Cth) J & J [2006] FamCA 442 |
| APPLICANT: | Ms Whatley |
| RESPONDENT: | Mr Whatley |
| FILE NUMBER: | PAC | 637 | of | 2007 |
| DATE DELIVERED: | 23 November 2007 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 23 November 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Harris |
| SOLICITOR FOR THE APPLICANT: | Caldwell Martin Cox |
| COUNSEL FOR THE RESPONDENT: | Mr Campton |
| SOLICITOR FOR THE RESPONDENT: | Dignan & Hanrahan |
Orders
The Court makes orders in terms of paragraph 2 of terms of settlement signed by the parties and marked as Exhibit Y.
IT IS NOTED that publication of this judgment under the pseudonym Whatley & Whatley is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC637/2007
| MS WHATLEY |
Applicant
And
| MR WHATLEY |
Respondent
REASONS FOR JUDGMENT
This is in effect, if not in form, the joint application for a declaration that an agreement entered into by the parties on 26 July 2005 and styled “Section 90C Financial Agreement” is not a binding financial agreement within the terms of s 90G Family Law Act 1975 (Cth) (“the Act”).
The application, as it has been clarified with the benefit of the submissions of Counsels for the joint applicants, turns on a short but interesting point, that being whether the certificate attached to the agreement of 26 July 2005 complies with the requirements of s 90G of the Act so as to render the agreement binding within the terms of the provisions of Pt VIIIA of the Act. If that is the case, whilst the agreement remains valid and effective no orders for settlement of property under Pt VIII of the Act can be made, or, as both parties contend, if the agreement is not a binding financial agreement within the terms of Pt VIIIA of the Act, there is no such impediment to the making of consent orders pursuant to Pt VIII of the Act.
The position factually is that the certificate contains four matters which are identified as having been the subject of independent legal advice received by each party to the agreement before the time at which each party signed the agreement. The first two of such matters are not controversial and fall within the provisions of s 90G of the Act.
It is convenient to refer to the provisions of the Act to indicate the ambit of uncertainty in relation to this application, starting by a reference to what is not uncertain. The agreement was clearly signed by both parties. The agreement clearly contains, as is required by s 90G(1)(b), a statement to the effect that each party had been provided before the agreement was signed, as certified in the certificate annexed to the agreement, independent legal advice from a legal practitioner.
The Act requires, and did in July 2005 require, that such independent legal advice applied to a number of matters. The first of those matters was the effect of the agreement on the rights of the party in respect of whom the legal practitioner was certifying. The subject agreement provided in that respect that independent advice had been given as to:
(iv)the effect of this Agreement on the rights of each party to apply for an order under the provisions of Part VIII and the new Part VIIIB of the Family Law Act, 1975 and/or otherwise to seek relief at law and in equity;
(v)the effect of this Agreement upon the rights of each party to make an application in relation to the other upon the death of the other for provision out of the other’s estate or notional estate under the Family Provisions Act 1982 (NSW) (Section 90C Financial Agreement of 26 July 2005, page 9, par Z).
The extent that the certificate referred to rights of each party beyond the ambit of the Act, the Court does not understand that to breach the terms of the spirit of s 90G(1)(b). Legal practitioners giving legal advice could perhaps be forgiven for thinking that comprehensive advice would be preferable to more circumscribed advice. More importantly perhaps, the section talks about the effect of the agreement on the rights of the party. Section 90G is not limited in relation to rights. It could reasonably be thought that it refers to rights arising pursuant to provisions of the Act. Logic would suggest that in a financial agreement it would be limited to financial rights.
The certificate in the present case referred to Pts VIII and VIIIB of the Act. The Court does not understand there to be any substantive financial relief able to be obtained by the party to a matrimonial cause pursuant to the Act which would not fall directly or indirectly under Pt VIII and/or Pt VIIIB of the Act. To the extent therefore that the certificate in this case is more specific than s 90G(1)(b)(i) appears to contemplate, that is not a matter which would in any way impugn its effectiveness or compliance with the statutory requirements.
The second matter required by the provisions of s 90G is that the certificate confirmed that independent legal advice had been given with respect to:
the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement
So reads s 90G(1)(b)(ii). It so read in July 2005.
The certificate in the present case reads as follows:
(iv)whether or not at that time [when the advice was provided] it was to the advantage, financial or otherwise, for each party to enter into this Agreement [emphasis added] (Section 90C Financial Agreement of 26 July 2005, page 9, par Z).
As learned Counsel for the wife pointed out, the wording differs significantly from that referred to in s 90G(1)(b)(ii) in that whereas the certificate in this case included the word “financially”, that word does not appear in s 90G(1)(b)(ii). The certificate in this case included two other provisions, they being in terms of ss 90G(1)(b)(iii) and (iv) (in the form of the Act as it was at the making of the agreement) which respectively read:
(iv)whether or not at that time it was prudent for each of the parties to enter into this Agreement.
(v)whether or not at that time and in the light of such circumstances as were at that time reasonably foreseeable (including the circumstances referred to in clauses 5 and 6 hereof) the provisions of this Agreement were fair and reasonable. (Section 90C Financial Agreement of 26 July 2005, pages 9 & 10, par Z).
It is common ground that the inclusion of those two sub-paragraphs in the present certificate finds no mandate in s 90G(1)(b) or elsewhere at the present time or, more importantly, at the time the agreement was entered into. As with the inclusion of the word “financially” or words “financially or otherwise” in subparagraph Z(ii) of the certificate in this case, the question which arises for determination is whether jointly or severally the different provisions of subparagraph Z(ii) and the inclusion of subparagraphs Z(iii) and (iv), impact on the question of whether or not the agreement of 26 July 2005 was binding.
The Court has been considerably assisted by the very thorough and helpful judgment of Collier J in the case of J & J [2006] FamCA 442, delivered by his Honour on 29 March 2006. The parties having been stripped of their names, it is probably necessary to refer to J & J (supra) as [2006] FamCA 442. So doing does not betray the anonymity of the parties. In J & J (supra) his Honour was faced with a factually not dissimilar situation to that which arises in the present case. His Honour said, and with respect this Court accepts correctly, at paragraphs 19 and 20 of his Reasons for Judgment:
19. To my mind, the words that appear in section 90G(1)…
which it is clear are the words which applied to the agreement of 26 July 2005,
…the words … ‘if and only if’, are words of real significance. They have a meaning. They import a requirement for a level of compliance, if the agreement is to be binding, that is clearly a standard or level above and beyond what might be described as substantial compliance. Those words ‘if and only if’ make it clear that each of the parties must ensure that that which is required to be contained and dealt with in the agreement, and the annexures to it, is in fact contained, appropriately and completely. Compliance must therefore be a full compliance, satisfying the statutory requirements.
20.Something approaching full compliance, or something that if looked at in a less than strict light, might come close to establishing compliance, is not enough. Clearly, the legislation intended that if this method of parties resolving their differences was to be used without any supervisory power of a Court, in a situation where parties’ rights were to be affected, then that which was to be done had to be done fully in compliance with that which the statute set out and required.
This Court can express the apparent rationale of Pt VIIIA no better than his Honour did, and respectfully adopts the logic underpinning his Honour’s observations.
In the circumstances of this case the question is to what extent the addition of provisions not finding any mandate in s 90G abrogate the binding nature of the agreement which would otherwise arise by virtue of the certificates strictly complying with the provisions of s 90G(1)(a) and (b).
During the course of discussion with Counsel, the Court was informed that the provisions of clauses 3 and 4, and perhaps the additional words in clause 2 of the certificate attached to the agreement of 26 July 2005, were consistent with the terms of s 90G prior to its amendment in 2004. The Court is potentially assisted in those circumstances by knowing why it was that the legislature chose in 2004 pursuant to the Family Law Bill Act 138 of 2003, to delete ss 90G(1)(b)(iii) and 90G(1)(b)(iv). Section 15AA of the Acts Interpretation Act 1901 (Cth) provides that:
(1)In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
As Collier J made clear in his reasons in J & J (supra), the legislative intention in relation to Pt VIIIA is not in doubt, and as his Honour correctly observed the legislation must have intended that for an agreement to have the far reaching effect which a binding financial agreement has, particularly as those consequences arise independently of any overview by any Court, strict compliance with the terms of the legislation in relation to binding financial agreements must be observed.
The Court approaches the question of interpretation in this case mindful of the provisions of s 15AA of the Acts Interpretation Act 1901. Section 15AB of the that Act provides:
(1)Subject to subsection (3) …
which does not arise in any relevant sense in this case,
in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material
Amongst the purposes for which that regard may be had, s 15AB(1)(a) and (b) provide:
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
For present purposes, to the extent that it is necessary to identify the basis upon which the Court does so, s 15AB(1)(b)(i), that is ambiguity, would provide in the Court’s view a sufficient basis for having regard to other material, provided that such material falls within the terms of s 15AB of the Acts Interpretation Act 1901. As hopefully is apparent from the discussion thus far, there is some potential ambiguity in s 90G(1)(b) insofar as the provisions of the section or the requirements of the certification provided for by the section were, by the 2004 amendments, reduced.
Section 15AB(2)(e) of the Acts Interpretation Act 1901 includes in the list of material to which the Court may have regard pursuant to s 15AB(1), subject to s 15AB(3) is:
(e)any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of the Parliament by a Minister before the time when the provision was enacted
The Court has obtained, with the acquiescence of Counsel for the parties, a copy of an explanatory memorandum issued in relation to s 90G(1)(b)(ii), (iii) and (iv). Paragraphs 129 and 130 of the explanatory memorandum are relevant for present purposes. They read as follows:
129.Item 2 removes the reference to legal practitioners being required to provide advice about the financial advantage or otherwise of a party entering into the financial agreement. It ensures that legal practitioners are not required to certify that they have provided the party with financial advice, but provides that the legal practitioner must provide legal advice about the advantages and disadvantages to the party of the making of the agreement at the time that the advice is being provided. Item 2 retains the requirement that legal practitioners must provide legal advice to their clients on the effect of the agreement on the rights of that party.
Item 2, it is clear, is a reference to what is now s 90G(1)(b)(ii). Paragraph 130 of the explanatory memorandum reads:
130.The amendments also remove the requirement for the legal practitioner to provide advice on whether it was prudent for the person to enter into the agreement and further whether looking to the future the terms of the agreement were fair and reasonable. It is clearly a very heavy onus on practitioners to provide advice that looks to the future and what is prudent from one persons point of view may not be prudent from another. The provision will now require the practitioner to certify about those things that they are expert. That is the actual effect of the agreement and the advantages and disadvantages of the agreement.
In this Court’s view, whether a narrow or broad interpretation of s 90G is adopted, the conclusion appropriate to be reached is that the agreement of 26 July 2005 was not a binding financial agreement. If one adopts a narrow interpretation of the legislative requirements, that is to conclude that the legislature made clear its intention that the certificate refers to the matters appearing in s 90G(1)(a) and (b), and only those matters, the agreement would fail. The Court prefers, to the extent that a preference is necessary, which it probably is not, however to approach the matter on the broader basis. That is to say, that the inclusion of additional provisions is not automatically a bar to an agreement becoming binding within the terms of s 90G. The difficulty, as Counsel for the wife indicated during the course of her submissions, which the clauses of this agreement must confront, is that by the inclusion of the word “financially” in subparagraph Z(ii), and the inclusion of subparagraphs Z(iii) and (iv), the certificate purports to address the very things which the Parliament clearly evidenced an intention that such certificates not address.
It is not difficult to understand why that was so. The explanatory memorandum in the paragraphs which have been read on to the transcript of these proceedings provides logical underpinning for so concluding. Not referred to in the explanatory memorandum, but a matter which is clearly of significance, is that the Court cannot know what impact the advice in relation to financial matters, prudence, fairness and reasonableness had on the mind of the party entering into the agreement. With no disrespect whatsoever intended to the legal practitioners who prepared the certificates in this case, the expertise of those legal practitioners, not to mention their capacity to foresee the future, has not been established.
In this Court’s view it cannot be assumed that the decision of each party to this agreement to enter into the agreement, and purportedly do so on the basis that the agreement once entered into would be binding in accordance with Pt VIIIA, would not have been materially influenced by advice in relation to matters for which there was no statutory mandate. The exercise of discretion by those parties in entering into the agreement was thus potentially influenced by the relevant and extraneous matters involving expertise which did not necessarily exist.
In regard to the wise words of Collier J in J & J (supra), the implications of agreements of this kind being binding within Pt VIIIA of the Act thoroughly justify the Court applying the strictest standard to their certification. The deficiencies, which the Court stresses is not said critically of the legal practitioners who prepared them, in the certificates attached to the agreement in this case go to the heart of s 90G. The additional word in subparagraph Z(ii), the inclusion of subparagraphs Z(iii) and (iv), are not mere verbiage; they did have the capacity to potentially influence the decision of those who entered into the agreements. To consider otherwise would be to fail to construe the legislation in a way that would promote the purpose or object underlying s 90G of the Act, as s 15AA of the Acts Interpretation Act 1901 makes clear. That is not a permissible course.
In all the circumstances the Court is satisfied that the agreement between the parties of 26 July 2005 is not a binding financial agreement within the meaning of that expression in Pt VIIIA of the Act.
The Court has before it an application for final orders filed on behalf of the wife on 28 August 2007. It has also a financial statement of the wife filed that date. I have sighted the financial statements of both parties. Both parties are represented by Counsel and solicitors of very considerable experience and competence. The Court accepts without hesitation the assurances that due diligence has occurred in relation to the proposed terms of settlement. The Court is satisfied that the orders are just and equitable.
I certify that the preceding twenty eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman
Associate
Date: 5 March 2008
3