Whittle & Whittle
[2023] FedCFamC1F 771
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Whittle & Whittle [2023] FedCFamC1F 771
File number: HBC 252 of 2023 Judgment of: MCGUIRE J Date of judgment: 7 September 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE - Discovery – Interpretation of s 90G(1A)(c) – Unjust and inequitable – Breadth of “relevance” of obligation for discovery – Narrow interpretation Legislation: Family Law Act 1975 (Cth) ss 79 and 90G
Federal Circuit and Family Court of Australia (Family Law) Rules 2021(Cth) rr 6.01, 6.06 and 10.10
Cases cited: Hoult & Hoult [2013] FamCAFC 109; (2013) FLC 93-456
Parker & Parker [2010] FamCA 664; (2010) 43 Fam LR 548
Parker & Parker [2012] FamCAFC 33; [2012] FLC 93-499
Division: Division 1 First Instance Number of paragraphs: 35 Date of hearing: Matter determined on the papers in Chambers Place: Hobart Solicitor for the Applicant: Murdoch Clarke Solicitor for the Respondent: Blissenden Lawyers ORDERS
HBC 252 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS WHITTLE
Applicant
AND: MR WHITTLE
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
7 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.The wife’s application for disclosure be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Whittle & Whittle has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCGUIRE J
I am asked to determine a discrete issue as to discovery/disclosure.
On 21 March 2023 the wife filed an application initiating proceedings seeking orders as follows:
1.Subject to full disclosure and the determination of the Respondent’s business interests that the matrimonial asset pool is divided equally.
2.That the Respondent pay the Applicant's costs of and incidental to this application.
Notably the application initiating proceedings was not accompanied by an affidavit of the applicant other than a standard Financial Statement.
Further, and also notably, the application at [51] answers ‘no’ to the question:
Have the parties entered into a financial agreement or a part VIIIAB Financial Agreement under the Family Law Act 1975 or under any relevant state or territory legislation?
In a Response to the Initiating Application filed 16 May 2023 the respondent husband seeks the following orders:
1.That the Initiating Application filed 21 March 2023 be dismissed on the ground that by virtue of the terms of the Financial Agreement between the Parties dated 31st May 2021, having been executed as a Deed, the Applicant is estopped from making any claim for property adjustive Orders, pursuant to Section 79 of the Family Law Act, or otherwise.
2.That, in the alternative to 1, pursuant to S90G(1A) and S90G(1B) of the Family Law Act 1975, an Order be made declaring the Financial Agreement between the Parties and dated 31 May 2021, is binding.
3.That the Applicant pay the Respondent's costs on an indemnity basis, of and incidental to all applications.
On 5 June 2023 orders were made pursuant to Rule 10.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) by Judge Taglieri that the hearing of the respondent's response, essentially the preliminary issue of the status of the Agreement, be bifurcated from the hearing of the applicant wife's substantive application. Accordingly the matter has been transferred to Division 1 of this Court.
The applicant wife now seeks an order for disclosure relevant to both parties as follows:
THAT on or before 26th June 2023, each Party make disclosure to the other of documents referred to in Rule 6.06(3) and all documents relating to the parties vested or contingent interest in the [B Group], specifically the [C Unit Trust], the [C Property Unit Trust] and the [D Unit Trustees] (the [B Group]), the Tax Returns, Management Accounts and other accounting reports of the [B Group] entities, any advice received from accountants, brokers and third parties as to the sale of the [B Group] entities, all correspondence with the other Unitholders, trustees of the trusts and any third parties as to the sale or valuation of the units in the trust, or any interest in the [B Group] entities, such correspondence to include written and electronic communication such as emails, text messages, WhatsApp messages, Facebook messaging and similar messaging which relate to the Applications referred to in Order 1.
The respondent's solicitor, in a letter to the applicant's solicitor of 31 May 2023, seeks specific discovery in the following terms:
1. All written communications between the parties:-
(a)Relating to the terms of the Financial Agreement and its drafting up to the date of its execution on 31st May 2021
(b)Regarding the implementation of the terms of the Agreement.
2.All drafts of the Financial Agreement not included in point 1, together with, if the Agreement was drafted by the Application:-
(a)All precedents or templates referred to by the Applicant in the process of drafting the Agreement.
(b)Any and all communications between the Applicant and any third party relating to:-
i.The drafting of the Financial Agreement.
ii.The requirements of the Family Law Act as they relate to Financial Agreements.
(c) All notes made by the Applicant relating to:-
i.The drafting of the Financial Agreement.
ii.The requirements of the Family Law Act as they relate to Financial Agreements.
3.If the Financial Agreement was drafted in whole or in part by a third party or third parties, all written communications between the Applicant and that third party or third parties concerning the drafting of the Financial Agreement.
The respondent opposes discovery in the broad terms sought by the applicant.
Where it seems agreed between the parties that the agreement dated 31 May 2021 does not satisfy the requirements of section 90G of the Family Law Act 1975 (Cth) (“the Act”), it is clear that the respondent, on the preliminary bifurcated Response, seeks a declaration that the agreement entered into by the parties is binding pursuant to section 90G(1A)(c) of the Act.
Section 90G(1) of the Act provides - subject to subsection (1A) - a financial agreement is binding on the parties to the agreement if, and only if:
(a)the agreement is signed by all parties; and
(b)before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
(c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and
(ca)a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and
(d)the agreement has not been terminated and has not been set aside by a court.
Section 90G(1A) provides a financial agreement is binding on the parties to the agreement if:
(1A) A financial agreement is binding on the parties to the agreement if:
(a)the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court.
Section 90G(1B) provides:
(1B)For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
THE APPLICANT ARGUMENT
Both parties, pursuant to previous directions, provided helpful written submissions and I am asked to make my determination on the consideration of those submissions.
The applicant concedes the existence of the financial agreement dated 31 May 2021 but says, and it appears to be common ground, that the agreement is not a Binding Financial Agreement because of non-compliance with the provisions of section 90G(1)(b), (c) and/or (ca) hence the applicant seeking orders under section 79 of the Act.
Broadly, the applicant argues that the Court can only make an informed judgment as to the “unjust and inequitable” provision of section 90G(1A)(c) if it is fully informed as to the detailed financial position of the parties on the date the agreement was entered into.
The applicant argues there to be an obligation to make full and proper disclosure pursuant to Rule 6.01 and 6.06 of the Rules which provide generally at 6.01:
1.Subject to subrule (4), each party to a proceeding has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the proceeding, in a timely manner.
Note: The proceedings to which the duty of disclosure applies include both parenting proceedings and financial proceedings. Failure to comply with the duty may result in the court excluding evidence that is not disclosed or imposing a consequence, including punishment for contempt of court.
2.The duty of disclosure applies from the start of the proceeding and continues until the proceeding is finalised
Note: Parties are also expected to comply with the duty of disclosure when complying with the pre-action procedures.
Rule 6.06 provides comprehensively in respect of documents to be discovered in financial proceedings.
Only in the applicant's Reply to the respondent's written submissions on the issue of discovery does the applicant wife then make the following submission at [2]:
2.The Applicant contends that the Respondent withheld information as to his true financial position and/or mislead the Applicant as to his true financial position to enter the agreement. Given the material disclosed in the Affidavit as to his financial, notwithstanding a subsequent sale of his business interest, the interest in the business and the now disclosed property is materially different to what he represented to the Applicant.
Significantly, in my view, is the wording of this submission:
…the interest in the business and the now disclosed property is materially different to what he represented to the Applicant
(My emphasis added)
Such a statement confuses or neglects the long line of authority (and indeed the statute itself at section 90G(1A)(c)) that any consideration of enforceability or declaration of validity of an agreement is binding “disregarding any change in circumstance from the time the agreement was made”. Again, where the applicant ‘pleads’ or particularises no fraud or non-disclosure in an affidavit then the weight of such an ambiguous submission is dubious at best.
THE RESPONDENT'S ARGUMENT
Firstly, the respondent argues that the applicant’s reliance on Rule 6.06 is misplaced as the bifurcated preliminary application is not a ‘financial proceeding’ but rather an obligation for disclosure as provided by Rule 6.03 which states:
1. The duty of disclosure applies to each document that:
(a)is or has been in the possession, or under the control, of the party disclosing the document; and
(b)is relevant to an issue in the proceeding.
Hence the respondent himself seeks discovery (by request rather than application) but only to the relevant issue which he says is the circumstance of the making of the agreement rather than the material relied upon in reaching that agreement and with emphasis on the fundamental philosophy of Part VIII that parties be able to opt out of the “justice and equity” requirements of section 79 of the Act.
ISSUES
As such, where the issue is the breadth of the obligation to make discovery with reference to the preliminary dispute of the status of the agreement of 31 May 2021 the Respondent argues a narrower interpretation of the obligation of discovery referenced towards “unjust and inequitable”. The applicant seeks broader discovery as to the “justice and equity” of the agreement itself in respect to the circumstances surrounding the parties reaching agreement. At its most abstract therefore, as with many issues or challenges to discovery, is the question of relevance.
CONSIDERATION
The leading authority on this issue, and specifically as to the consideration of “unjust and inequitable” in the context of section 90G(1A)(c) remains the majority (Strickland and Ainslie‑Wallace JJ) in Hoult & Hoult.[1]
[1]Hoult & Hoult [2013] FamCAFC 109; (2013) FLC 93-456 (‘Hoult’).
Their Honours confirmed that the operation of section 90G(1A) is not confined to technical breaches.[2]
[2] Parker & Parker [2012] FamCAFC 33; [2012] FLC 93-499.
Further their Honours recognised that the discretion at section 90G(1B) is a broad one informed by the pre-conditions of section 90G(1A)(a)-(e) being established and where a court exercising that discretion must inquire into the “facts and circumstances” surrounding the agreement in order to exercise that discretion.
At [286] their Honours succinctly address the issue now before this Court thus:
286.…we have no difficulty with the trial judge’s reasons up to the point where he suggests that, “in the exercise of the s 90G(1A) discretion, the ‘justice and equity’ of the bargain, or, perhaps, its inherent ‘fairness’ referenced to ordinary notions of that term, cannot be wholly irrelevant to the exercise of the s 90G(1A) discretion” (paragraph 37 reasons for judgment). It is here where we part company with the trial judge. We consider that his Honour has misdirected himself and applied the wrong test in interpreting and exercising the discretion.
It follows, as their Honours then determined, that it is only the facts and circumstances relevant to the making and performance of the agreement that are to be considered.[3]
[3] Hoult (n 1) 291.
To allow otherwise a consideration of the materials that informed the parties' agreement sits uncomfortably, or indeed offends, the notion of Part VIIIA sitting separately from the section 79 obligations of justice and equity in the making of property orders (and the similar requirements of the former section 87 in respect of Deeds). Notably, the remedial section itself at section 90G(1A)(c) specifically references “unjust and inequitable” as disregarding any change in circumstances from the time the agreement was made with emphasis on the ‘opting out’ nature of Part VIIIA agreements where parties are able to reach agreement outside of the normal requirements of justice and equity. Their Honours cited the trial judge at [31]-[32] as follows:
31.By way of (stark) contrast, the regime contemplated by Part VIIIA sees parties having the freedom to enter binding agreements without reference to what might be “just and equitable” within the meaning of s 79 of the Act. That is, binding agreements might be informed by the parties idiosyncratic notions or perceptions of what is, or is not, just and equitable or otherwise appropriate for them. Vitiating elements aside, the parties are perfectly free to make “a bad bargain” (in s 79 terms). Importantly, any such agreement can be “binding” within the meaning of s 90G and, by reason of so being, can exclude Part VIII of the Act without reference to a court and without reference to what a court might consider is a “just and equitable” settlement within the meaning of s 79.
32.These matter [sic] must, in my view, be important in the determination of whether it is “unjust and inequitable” to hold parties to an agreement that is otherwise not binding within the meaning of s 90G. That is, the underlying intention of the parliament, evident in Part VIIIA is an important aspect of the s 90G(1A)(c) discretion.
It must follow, therefore, that that the drafters of the legislation purposely distinguish the phrases “unjust and inequitable” in section 90G(1A)(c) from the common usage of “just and equitable” in section 79. As Strickland J said earlier at first instance in Parker & Parker:[4]
107.No guidance is provided either in the amending Act or the accompanying Explanatory Memorandum as to what is being referred to. On the one hand the reference to “disregarding any changes in circumstances from the time the agreement was made” could indicate that the efficacy of the agreement itself is to be considered in light of the circumstances applying at the time. On the other hand, if it was intended that consideration was to be given to whether an agreement was just and equitable when determining whether the agreement should bind the parties, s 90G(1A)(c) would have been worded differently.
[4] Parker & Parker [2010] FamCA 664; (2010) 43 Fam LR 548.
Consequently, as I find, that it is not open, or intended by the section, to conflate the “justice and equity” of the agreement at the time of its making with “unjust and inequitable” in the remedial section which references only the circumstances of the making of the agreement or its then operation but limited only to the list of factors identified by their Honours in Hoult being:[5]
•The terms of the section, the nature of a financial agreement as a creature of the Act, and the place of Part VIIIA within the overall scheme of the Act.
•The nature and extent of the non-compliance with the requirements of s 90G(1).
•The facts and circumstances surrounding the making of the agreement including, in particular, if one of the parties has complied with all of the mandatory requirements necessary to render the agreement binding.
•How the parties have acted subsequently in relation to the agreement (bearing in mind that changes of circumstances cannot be considered).
[5] Hoult (n 1) 307.
In summary, therefore, I follow the authority of Hoult in preferring the narrow or limited interpretation of “unjust and inequitable”, with relevance being only to the circumstances surrounding the making of the agreement and not to capture a consideration of the material considered or available broadly in the reaching of the agreement. To allow such a broad investigation would, as I have said above, sit uncomfortably with the rationale of Part VIIIA being to allow adults to opt out of the justice and equity requirements of section 79 of the Act.
In doing so, I therefore accept the Respondent’s argument that it is Rule 6.03 which here provides the obligation for discovery on the basis of relevance with this not being a ‘financial proceeding’ of the type captured by Rule 6.06.
Consequently, the only order I make is that the wife's application for disclosure be dismissed. In doing so I note that the respondent does not seek orders, but has simply made a written request, for disclosure consistent with my reasons above.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 7 September 2023