Zella & Canino
[2022] FedCFamC1F 314
•11 May 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Zella & Canino [2022] FedCFamC1F 314
File number(s): SYC 8744 of 2020 Judgment of: SCHONELL J Date of judgment: 11 May 2022 Catchwords: FAMILY LAW – FINANCIAL – Where the wife sought to not be bound by a Financial Agreement (“the Agreement”) entered into between the parties – Where the wife contended that the Agreement was not an agreement in accordance with the principles of contract and ought to be set aside for various reasons pursuant to ss 90B, 90E, 90G and 90K of the Family Law Act 1975 (Cth) (“the Act”) – Where the husband sought to dismiss the wife’s application – Court found unconscionable conduct on part of the husband, hardship if the Agreement was not set aside and that the Agreement was not binding pursuant to s 90G(1) of the Act – Ordered that the Agreement be set aside. Legislation: Family Law Act 1975 (Cth) ss 79, 90B, 90E, 90G, 90K, 90KA Cases cited: Abrum & Abrum [2013] FamCA 897
Australia and New Zealand Banking Group and Karam (2005) 64 NSWLR 149
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1934] HCA 14
Ellerton & Jennings (2021) FLC 94-059; [2021] FedCFamC1A 39
Fewster & Drake (2016) FLC 93-745; [2016] FamCAFC 214
Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33
Hoult & Hoult (2013) FLC 93-546; [2013] FamCAFC 109
Kaimal & Kaimal [2020] FamCA 971
Thorne and Kennedy (2017) 263 CLR 85; [2017] HCA 49
Whitford and Whitford (1979) FLC 90-612; [1979] FamCA 3
Division: Division 1 First Instance Number of paragraphs: 200 Date of last submission/s: 2 May 2022 Date of hearing: 24–25 February 2022 Place: Sydney Counsel for the Applicant: Mr Longworth Solicitor for the Applicant: Sexton Family Law Counsel for the Respondent: Mr Batey Solicitor for the Respondent: Greg Alfonzetti Solicitor ORDERS
SYC 8744 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ZELLA
Applicant
AND: MR CANINO
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
11 MAY 2022
THE COURT ORDERS THAT:
1.The Financial Agreement made 26 October 2007 be set aside.
2.The matter is otherwise adjourned to the Docket Registrar on a date to be fixed.
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 Zella & Canino has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings in relation to a Financial Agreement (“the Agreement”) entered into between the parties and made in 2007.
The Agreement was made less than 2 weeks prior to the marriage of the parties, which took place in 2007. The husband contends that the Agreement is binding. The wife seeks various orders and/or declarations broadly contending that she should not be bound.
Background and Procedural History
The wife was born in 1968 and is currently aged 53 years.
The husband was born in 1961 and is currently aged 61 years.
The husband and wife are the parents of X, who was born in 2010. X has been diagnosed with Autism Spectrum Disorder.
The parties met in 2006. The wife contends that they met in mid-2006, while the husband contends that they met in early 2006 and started dating soon after.
They became engaged in or around mid-2007.
In or around late 2007, the husband gave the wife a draft of the Agreement along with a copy of his Will. The wife contends that the husband told her they could not get married unless she signed the Agreement. The husband denies that he said this.
In late 2007, the wife went to seek advice about the Agreement from Mr B of C Solicitors. The wife did not sign the Agreement on that day.
On the same day, after visiting Mr B, the wife contends that she discussed her concerns regarding the Agreement with the husband. She asserts that the husband said words to the effect that the family law will protect her. The wife also contends that the husband said they would change the Agreement when they were further along in their marriage.
On 22 October 2007, the wife went to see Mr B again and signed the Agreement that day.
A few days later, the wife received a letter from Mr B stating that despite his advice that she should not be a party to the Agreement, the wife had executed the Agreement.
The parties married and commenced cohabitation in late 2007.
The parties separated in or around July 2020.
On 4 December 2020, the wife commenced proceedings in the Family Court of Australia (as it then was).
On 11 February 2022, the wife filed an Amended Initiating Application seeking financial orders related to the Agreement.
The hearing took place on 24 February 2022 and concluded on 25 February 2022. The parties proposed that they do written submissions. An agreed timetable provided for the last of the written submissions to be filed by 22 April 2022. As a consequence of some delays, final submissions were not filed until 2 May 2022.
Material Relied Upon
The wife relied upon the following documents:
(1)Amended Initiating Application filed 11 February 2022;
(2)Affidavit of wife filed 20 September 2021;
(3)Financial Statement of wife filed 20 September 2021;
(4)Points of Claim filed 22 March 2021;
(5)Case Outline;
(6)Written Submissions; and
(7)Written Submissions in Reply.
The husband relied upon the following documents:
(1)Amended Response to Initiating Application filed 8 November 2021;
(2)Affidavit of husband filed 8 November 2021;
(3)Affidavit of Mr D filed 11 February 2022;
(4)Defence to Points of Claim filed 7 May 2021;
(5)Case Outline; and
(6)Written Submissions.
Each party tendered various documents.
The Court has read all of the material relied upon by the parties and the Exhibits, and has had regard to the comprehensive written submissions in reaching its determination.
The wife’s written submissions set out what she regarded as the relevant questions for determination as follows:
12. …
A. Is the ‘Agreement’ in question an agreement according to the principles of contract?
B. If the ‘Agreement’ is an agreement, is it a Financial Agreement pursuant to s.908?
C. Can an ‘Agreement’ that is not a Financial Agreement nonetheless be binding pursuant to s.90G?
D. If the ‘Agreement’ is a Financial Agreement, ought it be set aside pursuant to s.90K?
E. If the ‘Agreement’ is not set aside pursuant to s.90K but is also not a Financial Agreement pursuant to s.908, is it 'binding' pursuant to s.90G(1)?
F. If the ‘Agreement’ is not 'binding' pursuant to s.90G(1), ought it nonetheless be declared binding pursuant to s.90G(1A)?
G. If the ‘Agreement’ is not set aside and is either binding or declared to be binding, are the parts of the document which relate to the provision of maintenance to the Wife, void pursuant to s.90E?
Conveniently, the husband addressed his submissions by responding to the above issues.
The wife sought the following orders:
1.A declaration that the document executed by the parties on 26 October 2007 is not a Financial Agreement pursuant to section 90B of the Family Law Act 1975 (Cth) (the “Act”).
2. That in the event that the document executed by the parties on 26 October 2007 is found to be a Financial Agreement, that pursuant to section 90G of the Act it is not binding upon the parties.
3. That in the event that the document executed by the parties on 26 October 2007 is found to be a Financial Agreement binding upon the parties, that pursuant to section 90K of the Act, it be set aside.
4. That in the event that the document executed by the parties on 26 October 2007 is found to be a Financial Agreement binding upon the parties, that pursuant to section 90E of the Act any provision of the document relating to the maintenance of the Wife is void.
The husband sought orders in his Response as follows:
1.That the Application of the Wife for Orders 2 and 3 of the Orders sought in her Initiating Application filed 7 December 2020 (“the wife’s Initiating Application”) in respect of the financial Agreement between the parties dated 26 October 2007 (“the Financial Agreement”) be dismissed.
2.In the alternative to Order 1, in the event the Court determines that the Financial Agreement not be set aside pursuant to Sections 90K(b) and 90K(e) as sought in the wife’s Initiating Application, the issue of whether the Financial Agreement should be set aside pursuant to Section 90K(d) (as sought in the wife’s Initiating Application in Order 3) be adjourned until the determination of the substantive parenting proceedings between the parties.
3.Costs.
The husband through his counsel indicated at the start of the hearing that he did not press the alternative relief sought in Order 2 and was seeking a mere dismissal of the wife’s application.
The parties, through their written submissions, have identified what they regard as the relevant issues for determination. The Court proposes by these reasons to address the issues as proscribed by the parties.
Before doing so, it is important to identify some aspects of the Agreement.
The Agreement was made on 26 October 2007 and contained various recitals, which set out that the parties had not been married before and had no children, identified that the parties’ respective incomes, superannuation savings and motor vehicles were of approximately equal value. It otherwise identified that the parties had no jointly owned real property and that the husband’s real estate assets and shares had a value of approximately $3.735 million.
The Agreement provided that the husband would, on marriage, pay the outgoings and day-to-day expenses and that the wife would otherwise retain her income. The Agreement provided that in the event that the parties separated, the wedding gifts would remain the property of the party whose side of the family made the gift, the parties would each retain their pre-marriage property that was in their sole name, and any future property in the parties’ sole name would remain their property.
There was no adjustive payment by one party to the other upon the breakdown of the marriage.
Oral Evidence of the Parties
Each party urged that I make findings as to the credit of the other. Each suggested that their evidence should be preferred where it conflicts with the evidence of the other.
The wife was cross-examined by very experienced counsel. The husband contends in his submissions that the wife was “highly evasive throughout the course of her cross-examination” (at paragraph 7), and that her evidence “was of a neither frank manner nor responsive and clear” (at paragraph 9). The husband also contended that she had to be encouraged to be audible, that she was generally not responsive and that she was prone to making speeches.
I accept that the wife had to be asked to speak up on a number of occasions so her answers could be heard. That does not however go to her veracity but rather goes to the softness of her voice. As to the other observations of her evidence, the difficulty is that they are a series of statements devoid of specific examples referenced to the evidence (despite having the benefit of a transcript) with the exception of a reference to pages that were torn from a diary. In respect of that event, it is not clear how that goes to her truthfulness. The missing pages, it is said, may have corroborated the husband’s version of events. They equally may not or indeed may have corroborated the wife’s version. It is just arid and thus pointless speculation.
Overall, the submissions of the husband’s counsel as to the manner in which the wife gave her evidence do not accord with my observations of her giving her evidence. I observed that the wife was a careful witness who was generally responsive and answered the questions asked of her. Her evidence was not impugned by cross-examination.
The husband was cross-examined by experienced counsel. The husband conceded in answer to questions from counsel for the wife “I am illiterate. I can’t read or write properly” (Transcript 24 February 2022, p.98 line 4). When asked questions about his affidavit, which he said had been read to him by his brother, he more particularly answered:
[COUNSEL FOR THE WIFE]: All right. And [Mr D] was with you at the time? ---Yes.
And the process was what? How did you understand what was in the document? ---[Mr D] explained it to me.
And how did he do that? ---He went – we went through it.
Right? ---And he read it.
Right? ---And he explained to me what it was, if I had a question, what it meant.
Okay? ---He would – he would tell me what it meant, and so forth.
Did he read the words out aloud to you? ---Sometimes he does, yes.
But sometimes he doesn’t? ---And sometimes he doesn’t, no.
And with that document, sometimes he did and sometimes he didn’t? ---Yes. It was a mixture of both.
Okay? ---Some of it I could read.
Okay? ---But not all of it.
(Transcript 24 February 2022, p.100 lines 5–26)
The husband’s brother swore an affidavit, where he said the husband’s ability to read and write is very limited. The difficulty with the husband’s evidence is that it conflicts with the evidence of his brother who said that he read the affidavit to the husband before he signed it. The difficulty was compounded by the absence of re-examination to identify which parts of the affidavit were read to the husband and by inference, which were not. I am left in the invidious position where I am unsure what parts of the husband’s affidavit constitutes evidence that he adopts.
The husband in giving evidence was at times emotional and argumentative. He had to be directed on a number of occasions to answer the question. During cross-examination the husband denied ever saying to the wife “I’ll shoot you down in flames if you do that” and “Your life won't be worth living” (Transcript 25 February 2022, p.127 line 23 to p.128 line 13). The propositions, however, were contained in his affidavit sworn 16 December 2021 (Exhibit 8). There was no re-examination (possibly understandable) on this topic. I am left with a clear inconsistency on this evidence.
I do not make a general credit finding on the basis solely of the above matters and then as urged reject either party’s case.
The above matters will inform in part how I approach the evidence of both parties. Where the parties are in conflict, I will focus on the answers in cross-examination and the conflict (if any) with sworn evidence, and examine carefully the factual issues between them. I will approach the making of findings in part informed by the above matters but also by looking to matters including consistency of a particular version with undisputed facts, corroboration by other evidence that is independent and/or likely to be reliable, and concessions made under cross-examination.
I propose to now address the issues as raised by the written submissions of the parties.
Issues for Determination
Is the Agreement in question an agreement according to the principles of contract?
The wife submits that as one of the parties is mistaken about the nature of the document they signed, the principle of non est factum can render the contract void. According to her counsel’s written submissions, the foundation for that submission is that the wife felt overwhelmed in signing the Agreement and did not read it, and that there is no evidence that the husband had the document read to him before he signed it. From this foundation it is said that as neither party read the document there is no Agreement.
I note in passing, but do not find it determinative, that this proposition is not set out in the wife’s Points of Claim. Nor is it set out in her Case Outline.
I do not accept the submission as the foundation that underpins it is erroneous.
The submissions mischaracterise the wife’s evidence as to her reading the Agreement. In cross-examination the wife said:
[COUNSEL FOR THE HUSBAND]: So you went to see him on the 22nd and as I understand your evidence that’s when you actually signed the agreement?---On 22 October.
On the 22nd. Did you read through it to see if it had been changed?---I don’t recall. I don’t think I did.
Well, it was important to you, wasn’t it, given that you had had concerns? Did you ask him if the concerns had been addressed in the agreement that he was asking you to sign?---No. I did not.
No. I’m taking it you didn’t read the agreement before you signed it either; is that the correct situation?---I just – no. I didn’t read it.
Sorry?---I didn’t read it.
You didn’t read it?---Properly, no.
So you had no idea if your concerns were addressed?---I just see - - -
Did you subsequently receive some advice from [Mr B]?---I received advice
from [Mr B] on 11 October 2007.
(Transcript 24 February 2022, p.32 lines 7–27)
It is clear from the above and contrary to the submission, that what the wife is saying is that she did not read the Agreement ‘properly’, whatever that might mean. This was not pursued in either cross-examination or re-examination.
I note the wife’s sworn evidence at paragraphs 17 and 18 of her affidavit, where she gives evidence that she read the Agreement and refers to various parts of it. Her evidence is that she read it at least once and then prior to signing read it but not properly. Whilst I accept the wife’s evidence that she was overwhelmed when she signed the Agreement, that does not provide a foundation without more for the submission of law that her counsel makes.
The submission that there is no evidence that the Agreement was read to the husband before he signed it suffers from a deficiency of logic. While I accept that there is no evidence the Agreement was read to the husband, it does not follow that it was not read to him. The submission might have some force if the husband had been challenged in cross-examination on the proposition but he was not.
As these are the only foundations for the submission, in view of my findings, I reject it and I find that the parties entered into an Agreement in October 2007.
If the Agreement is an agreement is it a financial agreement pursuant to s 90B of the Act?
This submission is based on the proposition that the Agreement is silent as to any reference to s 90B of the Family Law Act 1975 (Cth) (“the Act”).
Section 90B(1) provides:
Financial agreements before marriage
(1) If:
(a)people who are contemplating entering into a marriage with each other make a written agreement with respect to any of the matters mentioned in subsection (2); and
(aa)at the time of the making of the agreement, the people are not the spouse parties to any other binding agreement (whether made under this section or section 90C or 90D) with respect to any of those matters; and
(b) the agreement is expressed to be made under this section;
the agreement is a financial agreement. The people may make the financial agreement with one or more other people.
I accept that nowhere in the Agreement is there language capable of being interpreted that the Agreement is ‘expressed’ to be made under s 90B. I note that the certificate attached to the Agreement says “[u]nder section 90B (Financial Agreements before Marriage) of the Family Law Act”. However, the certificate does not form part of the Agreement between the parties.
That is not in compliance with the legislation.
I accept the submission of the wife that the Agreement cannot be a financial agreement within the meaning of the Act without express reference to s 90B.
The husband contends by reference to the Full Court’s decision in Graham & Squibb (2019) FLC 93-892 that if the common intention of the parties is clear but the Agreement omits reference to s 90B, then such omission is capable of rectification.
I accept that the Court has power pursuant to s 90KA to rectify agreements in certain circumstances.
The husband contends the common intention of the parties is clear, as to both substance and effect, and therefore, the Agreement is amenable to rectification. In support of such proposition, the husband relies upon the wife’s evidence that her solicitor told her it was a s 90B agreement. The difficulty with the submission is that the husband does not seek and never has sought rectification despite the absence of such relief being alluded to at the hearing.
In those circumstances, in the absence of such relief, and consequently submissions as to whether the relief should be granted, I find that the Agreement does not comply with s 90B and consequentially is not a financial agreement within the meaning of the Act.
Can an agreement that is not a financial agreement nonetheless be binding pursuant to s 90G of the Act?
Both parties submit that if the Agreement in question is not a financial agreement within the meaning of the Act then it cannot be binding within the meaning of s 90G.
I accept as a matter of clear interpretation the accuracy of that submission.
In light of my earlier findings that the Agreement is not a financial agreement within the meaning of the Act, s 90G has no application as it only applies to financial agreements.
If the Agreement is a financial agreement ought it be set aside pursuant to s 90K of the Act?
The wife brings her claim within s 90K(1)(b) and s 90K(1)(e) alleging duress, undue influence and unconscionable conduct on the part of the husband as well as hardship in the terms of s 90K(1)(d).
The relief sought under s 90K is dependent in large measure on factual findings.
The parties agree that they met in 2006 but disagree exactly when.
In the wife’s affidavit, she says the parties met in or about late 2006 but she sought to correct her affidavit in her evidence-in-chief asserting that they met in mid-2006 and started dating in late 2006.
The husband gives evidence that the parties met in early 2006 and started seeing each other with some regularity within about two to three months. He contends that by about late 2006, the frequency of seeing each other had increased to Fridays, Saturdays and Sundays.
The husband thereafter gives detailed evidence of discussions between him and the wife about having children and, in particular, indicates that from about Christmas 2006 or shortly thereafter, there were according to him numerous discussions to the effect that if the parties were to marry there would need to be some document to protect himself. The issue as to when such a document was first raised is an issue as between the parties.
It seems common ground that the parties became engaged in mid-2007.
The wife gives the following evidence:
8.In [mid] 2007, [Mr Canino] asked me to marry him. I was delighted and thrilled about the engagement and our future life together, including the possibility that we may have a child or children. At the age of 38 years, I was beginning to feel that I may never marry or have children and so I felt incredibly lucky to have finally met someone with whom I could share my life and form a family. I immediately told my family and friends and started to think about the wedding day.
9.In the months leading up to the wedding, I busied myself with wedding preparations. I booked the Church and reception venue, I booked the photographer, organised the disc jockey, arranged the catering, selected and booked the hire cars, spoke to my hairdresser about how I might wear my hair on the day and did some practice sessions to try different styles, booked the make-up artist for the day, planned the wedding dress and arranged for it to be made, and made the invitations by hand. I organised the hiring of wedding suits for [Mr Canino] and his brother and also took [Mr Canino’s] mother to the city to look at dress options for her for the wedding.
10.I was especially excited about planning my wedding dress. I looked through lots of bridal magazines for inspiration. I went into different bridal shops and tried on various dresses to see what suited me. I decided to have a dress custom made, similar to one that I saw in a bridal magazine, from [E Company] in [Suburb F]. I was really pleased with the dress I chose to wear because I wanted to look my best for my “big day” and to look beautiful for [Mr Canino]. Annexed to this affidavit and marked “B” is a photograph of me in my wedding dress on our wedding day.
11.[Mr Canino] and I invited thirty-five guests to the wedding. Annexed to this affidavit and marked “C” is a list of the guests and their relationship to me and/or [Mr Canino].
12.I booked [a church] in [Suburb G] for the wedding ceremony. I also researched venues for the reception venue, which was [H Venue] in [Suburb J]. At the time that I booked the reception venue, I was required to pay a 50% non-refundable deposit, which was about $5,000. I recall that I paid a further $5,000 for the reception in the lead up to the wedding.
This evidence was not the subject of challenge by the husband.
The husband gives evidence that following their engagement they continued to have conversations about a financial agreement and where they would live.
The marriage was to take place in late 2007.
The husband says the following in his affidavit:
50. As the marriage date was approaching, in mid-September 2007 I consulted with [Mr K], Solicitor, of [L Solicitors] at [Suburb M] about a Financial Agreement to protect my assets and a Will in contemplation of my intended marriage to [Ms Zella].
…
53. I gave a hard copy of the draft Financial Agreement to [Ms Zella] in September 2007. I do not recall the exact date but I do recall that it was within a day or two after it was prepared.
The wife contends that in or about September or October 2007, the husband asked her, in circumstances she describes as “out of the blue”, what her financial position was and how much she earnt.
The wife thereafter gives evidence to the following effect:
14.A few weeks after the conversation at the park in [Suburb N], [Mr Canino] and I were in [Mr Canino’s] car when he handed me an envelope. He said to me: “Inside is a financial agreement to protect my assets. I don’t want the same thing to happen again as happened with [Ms O] because my brother is involved as a partner. Take it to a lawyer and sign it.” We can’t get married unless you sign the agreement. The BFA is generous. It is not a big deal. It is just security for [Mr D]. What happened with [Ms O] was very stressful. I love you very much, I would not do anything to you. You will be taken care of, don’t worry about it. If you love me, you will sign the agreement.”
15.This was the first time that [Mr Canino] had mentioned an agreement. I recall feeling shocked in that moment and was speechless. I was also upset that [Mr Canino] said that we couldn’t get married unless I signed the agreement, as the wedding was already set […] and all the arrangements were in place.
The husband in his affidavit elected to respond to these paragraph in the following terms saying:
95.2 As to paragraph 14:
a)I agree that I gave an envelope containing the Financial Agreement to [Ms Zella] while we were in the car and I refer to my previous evidence about this;
b)This did not and would not have occurred “a few weeks after” the communication [Ms Zella] refers to in paragraph 13 and I refer to my earlier evidence about when I gave her the Agreement;
c)I deny I ever said to [Ms Zella] “take it to a lawyer and sign it. We can’t get married unless you sign the Agreement. The BFA is generous. It’s not a big deal. If you love me you will sign the Agreement” and I refer to my earlier evidence about our conversations with respect to this matter.
95.3As to paragraph 15, I deny that when I gave [Ms Zella] the envelope was the first time I mentioned an Agreement and I refer to my previous evidence about our communications in respect of this and other matters.
The wife asserts that on 11 October 2007 she attended upon the solicitor Mr B.
She left the Agreement with Mr B. She contends that later that day, she had a conversation with the husband to the following effect:
23.Later that day, I said to [Mr Canino]: “My lawyer pointed out that the agreement doesn’t mention what will happen if we have children.” [Mr Canino] responded: “Your lawyer doesn’t understand contract law, he is giving you the wrong advice, trust me. He knows nothing about it, he’s an idiot. It’s a fair contract. You will be protected by the family law should we have children. [Mr D] thinks it’s a fair contract and doesn’t understand why you won’t hurry up and sign it.” [Mr Canino] continued: “When we get married and are further along, I will change the contract. If you really love me, you will sign the agreement. We can’t get married unless you sign the agreement. I love you very much, I would not do anything to you. You will be taken care of, don’t worry about it. The family law will protect you, you don’t need to worry, and I will do the right thing.”
The husband at paragraph 95.5 of his affidavit denies this conversation.
The wife gives evidence to the following effect:
27.After the discussion with [Mr Canino] […] and before signing it on 25 October 2007, Mr Canino repeated statements to me such as: “If you love me, you will sign the agreement”, “We can’t get married unless you sign the agreement”, “I love you very much, I would not do anything to you. You will be taken care of, don’t worry about it”, “When we get married and are further along, I will change the contract”, “The family law will protect you, you don’t need to worry, and I will do the right thing.”
The husband says the conversation about changing the ‘contract’ was only in the context of purchasing property together. He otherwise denies this conversation.
The wife attended upon Mr B for a second time in late 2007. She says in her affidavit:
28.… I recall feeling overwhelmed at the time as the wedding was just over one week away. … I feared the humiliation of cancelling the wedding especially after a significant amount of time and money on planning the event.
29.I also believed [Mr Canino] when he said that we could not get married unless the Agreement was signed. This belief was based on my view that [Mr Canino] was a man of his word and would follow through with the things he said, just as I believed him when he told me that the Agreement could be changed later and that he would look after me.
The wife was not cross-examined on paragraph 28 of her affidavit.
The wife informed the husband prior to signing the Agreement that she did not want to make a claim on his property.
The wife signed the Agreement on 22 October 2007.
The Agreement that was signed was one that made no provision for the wife by way of spousal maintenance or property settlement.
As is apparent from above, the parties are in dispute about a number of significant issues, namely:
(1)When was the topic of a financial agreement first raised?
(2)Did the husband say words to the effect of we cannot get married if you do not sign it?
(3)Did the husband say the Agreement would be changed after marriage?
(4)Did the husband, in essence, tell the wife that her solicitor was giving her bad advice?
(5)Did the husband repeatedly raise with the wife the issue of signing the Agreement saying, in essence, that the marriage would not go ahead if it was not signed?
I accept the wife’s evidence where it conflicts with the husband. In reaching that conclusion, I have had regard to what I have said earlier about the parties’ evidence. That, taken with my findings below, inform my finding that I prefer the wife’s evidence.
The husband chose to respond to the wife’s evidence at paragraph 15 of her affidavit at paragraph 95.3 of his affidavit, and put in issue that it was not the first time that they had discussed a financial agreement. He did not deny the wife’s reactions upon being handed the Agreement. The wife was not cross-examined about her reaction, namely that she felt shocked and was speechless. I find her reaction is entirely consistent with being told about such a topic for the first time. Her reaction is inconsistent as a response to a topic that had been on his case allegedly discussed on numerous occasions and about which there could be no surprise. No submission was made otherwise explaining her reaction to being presented with such a document. I reject the husband’s evidence that this was something that was the topic of any earlier conversation.
I accept the wife’s evidence in her affidavit that the husband said, “take it to a lawyer and sign it” and “the BFA is generous” (at paragraph 14). The husband’s denial of these parts of the conversation in paragraph 95.2 of his affidavit is inconsistent with his evidence in cross-examination where he admits making these statements.
I accept the wife’s evidence that the husband said they could not get married unless they signed such an agreement. I accept the wife’s evidence that this was said on a number of occasions after she was first given the Agreement. I do not accept the husband’s denial. The husband’s denial is inconsistent with his sworn evidence where he says:
55. I handed the Agreement in an envelope to [Ms Zell]a while we were in my car. When I handed it to her I said “This is the Agreement my lawyer prepared to protect my assets. You need to take it to your own lawyer to get advice. Can you please do this as it's really important if we are going to get married.” [Ms Zella] replied “I will.”
I accept that he said to her words to the effect that he would change the Agreement after marriage. His denial of this proposition is inconsistent with his oral evidence and an email sent by the husband’s solicitor to the husband on 12 October 2007 (husband’s affidavit filed 8 November 2021, Annexure D), which says:
You and [Ms Zella] should re-do this family law deed after, say, two years and keep updating it during marriage as needed.
I accept the wife’s evidence that she gave in her affidavit at paragraph 27. I accept that the husband was motivated to ensure that the wife signed a financial agreement and repeatedly made statements to that effect. It is consistent with what he says at paragraph 55.
I accept the wife’s evidence that the husband said to the wife that she was getting bad advice. I accept that the husband told the wife the Agreement was generous. The husband agreed he ‘may’ have told her that (Transcript 2 February 2022, p.112 line 20). It plainly was not generous to her.
I note that the correspondence from the husband’s lawyer to the husband was to the effect that the wife’s lawyer was giving her poor advice. The solicitor’s email of 16 October advised that the wife was getting ‘wrong advice’ and that the husband should show the wife the email.
For all of the above reasons, I prefer the wife’s evidence where it conflicts with the husband’s.
I summarise my factual findings as follows:
(1)The parties became engaged in mid-2007.
(2)The wedding was arranged to take place in late 2007.
(3)The wife was delighted and thrilled about the engagement, the parties’ future life together and the possibility of having a child, something she thought may not happen.
(4)The wife was heavily involved in the wedding arrangements and was excited about the prospect of marriage.
(5)In late 2007, the husband presented the wife with a draft financial agreement. This was the first time she knew that the husband wanted her to sign a financial agreement.
(6)The husband told her that if she did not sign the Agreement, the marriage would not go ahead.
(7)After visiting the lawyer, the husband made statements to the wife that would suggest that her lawyer was giving her wrong advice. This is despite the husband telling the wife that it was generous, thereby undermining the advice she received. The husband also told the wife that once they got married, he would change the contract.
(8)Between the first appointment and the second appointment with the lawyer, the husband repeatedly made statements to the wife that they would not get married unless she signed the Agreement.
(9)The wife attended the lawyer on the second occasion when she signed the Agreement.
(10)I accept the wife’s evidence that she felt overwhelmed at the time as the wedding was imminent. I accept the wife’s evidence that she believed that the Agreement would be changed later.
(11)I accept that the wife felt that she had to sign the Agreement given the impending wedding and that she was humiliated and embarrassed at the thought of having to cancel the wedding.
(12)I find that the Agreement was one-sided and upon separation, the wife would receive no maintenance or property settlement. That is self-evident from its terms.
(13)I find his repeated statements that the marriage would not go ahead if the Agreement was not signed and saying that the Agreement would be changed after they got married all the time knowing that the wife wanted to marry and had made extensive preparations to marry were made to encourage her to sign.
Duress
The wife through her counsel contends that the wife was subject to duress such that the Agreement entered into between the parties should be declared void, voidable or unenforceable.
As stated earlier, I accept the wife’s evidence as to the representations made by the husband that if she did not sign the Agreement, the marriage would not go ahead. No matter how unpleasant the wife might have found such assertions, they do not amount to duress.
I regard myself bound by Australia and New Zealand Banking Group and Karam (2005) 64 NSWLR 149 (“Karem”) that to establish duress what is required is threatened or actual unlawful conduct.
In Thorne and Kennedy (2017) 263 CLR 85 (“Thorne v Kennedy), the plurality in the High Court referenced Karem but did not overrule it.
There is no evidence of threatened or actual unlawful conduct by the husband
The wife’s counsel submitted that the wife’s lack of financial or legal acumen, the husband’s lack of disclosure, the lack of negotiation of the terms of the Agreement, the timing surrounding the first presentation of the Agreement and the fact that the wife’s suggested amendments were effectively ignored as well as other matters raised at paragraphs 26 to 40 of his written submissions are all ingredients relevant, in part, to a conclusion of ‘emotional threat.’
I do not reject the concept that they might have bearing on a conclusion of emotional threat. However, they have nothing to do with the indicia of duress at common law as currently represented by the law, which I am bound to follow.
In the written submissions, counsel for the wife asserted:
41.The Wife contends that if it is found the Husband did not exert any unlawful pressure on the Wife to sign the Agreement (within the jurisprudence at common law) this does not defeat her contention having regard to the statutory policy of the Family Law Act by which there is created a matrimonial context which is to be applied in such cases, as to inform the application of s 90KA. Arguments in this regard are contained in the Points of Claim (at 15 & 16) upon which the Wife relies.
The difficulty with this proposition is that no argument is developed or advanced in support of the proposition.
I do not find that the wife was subjected to duress.
Undue Influence and Unconscionable Conduct
The wife urges that the Court find the Agreement is vitiated by undue influence or unconscionable conduct.
The factual foundations for undue influence and unconscionable conduct may arise from the same set of facts. As Gordon J in Thorne v Kennedy makes plain:
86.… the two doctrines may be engaged by the same set of facts. The point rather is the focus of the enquiry is different. …
(Footnote omitted)
In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Mason J explains the difference between undue influence and unconscionable conduct at 461:
… In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former 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 unconsciously taking advantage of that position.
Undue influence focuses upon the mind of the party who is in a weaker position. Unconscionable conduct focuses attention on the actions of the stronger party.
Undue Influence
The plurality in Thorne and Kennedy make plain that in a determination of undue influence:
32.… It is not necessary for a conclusion that a person’s free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a “mere channel through which the will of the defendant operated”. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be “markedly substandard” as a result of the effect upon the person’s mind of the will of another.
(Footnotes omitted)
And, as their Honours thereafter further explained:
43.… in undue influence there will be questions of evaluative judgment involved in assessing whether the extent to which a person’s will has been subordinated to another’s is sufficient to characterise the person as lacking free will. …
I accept that the husband put pressure on the wife to sign the Agreement by saying to her that the marriage would not go ahead if she did not sign the Agreement, whilst at the same time saying to her that the Agreement would be changed upon marriage. I also find that he sought to undermine her confidence in her lawyer by representing to her that she was getting the wrong advice and that the Agreement was generous. I accept her evidence that she was embarrassed and felt humiliated if she had to cancel the wedding.
In the written submissions, the wife’s counsel submits that her “judgemental capacity was ‘markedly substandard’” (at paragraph 48). Beyond the hyperbole, it is not established that her judgemental capacity was so markedly substandard.
I accept the submission that it was an improvident agreement for the wife to enter into and take note as their Honours make plain in Thorne and Kennedy, that such is the nature of these agreements where they state:
56.… despite the usual financial imbalance in agreements of that nature, it can be an indicium of undue influence if a pre-nuptial or post-nuptial agreement is signed despite being known to be grossly unreasonable even for agreements of this nature. …
The wife’s counsel submits the wife’s lack of entitlement under the Agreement, and the absence of provision for children and the fact of the parties’ child’s disability “as potentiating her being thrown on the community contrary to the policy of the law in the matrimonial context” (at paragraph 53). That submission mixes events that postdate the signing and cannot be vitiating conduct nor does it amount to undue influence.
Notwithstanding my findings about the husband’s conduct, undue influence looks to the effect on the mind of the wife. The wife has not established that at the time she entered into the Agreement she “did so otherwise than in the free exercise of her independent will” (Thorne v Kennedy at [98]).
The wife knew that if she did not sign the Agreement, the husband would not marry her. The wife knew what she was doing. That involved her making a conscious decision to proceed in the exercise of her “free will”. It is evidence consistent with the exercise of an independent mind.
The wife has not established that her ‘free will was substantially subordinated’ such as to find undue influence.
Unconscionable Conduct
The plurality in Thorne v Kennedy in relation to unconscionable conduct direct that the inquiry must result in a finding that:
38.… the innocent party to be subject to a special disadvantage “which seriously affects the ability of the innocent party to make a judgment as to [the innocent party’s] own best interests”. …
(Footnote omitted)
I find that the wife’s agreement to entering into the Agreement was as a consequence of the unconscionable conduct of the husband.
Contrary to counsel for the husband’s eloquent submissions, I find that the husband created the special disadvantage that the wife operated under by the pressure exerted on her through repeated statements to the effect that the marriage would not go ahead, presenting the Agreement to her well after marriage plans were underway and a wedding was imminent and thereafter suggesting to her that the Agreement would later be changed, as well as making statements to her that could only have been designed to undermine her confidence in her independent legal advice while maintaining that it was generous to her. The husband knew when he was making these statements that the wedding was imminent, he knew that the wife was very much in love with him and excited at the prospect of marriage and in particular, excited at the prospect of having children, something that she had clearly contemplated may not happen given her age.
I find the wife was at a special disadvantage knowing as she did that if she did not sign the Agreement the marriage would not go ahead. It is plain, based upon my earlier findings, that the wife was emotionally invested in the relationship and looking forward to a future life with the husband. Thus, her representations to him that she did not wish to make a claim against him were entirely consistent with her desire to marry and have children such that she entered into an agreement that was entirely contrary to her interests.
I do not accept the husband’s submission that anything flows from the wife’s occupation as a professional or that she had a tertiary education. If it is to be inferred that persons with a tertiary education or those with a higher level of education cannot be subject to a special disadvantage, then the proposition need only be stated to demonstrate its inherent fallacy. There is no carve out exception that only those with secondary education or less can be the subject of unconscionable conduct.
I find that knowing that the wife was at this special disadvantage, the husband took advantage of her. Such advantage is demonstrated by the continual urgings for her to sign the Agreement, the undermining of her confidence in her legal advice, the assertion the Agreement was generous, and the assertions that the Agreement would be changed later. As Gordon J makes plain in Thorne v Kennedy:
123.… The fact that Ms Thorne was willing to sign both agreements despite being advised that they were “terrible” serves to underscore the extent of the special disadvantage under which Ms Thorne laboured, and to reinforce the conclusion that in these circumstances, which Mr Kennedy had substantially created, it was unconscientious for Mr Kennedy to procure or accept her assent.
(Emphasis in original)
Such finding is apposite to the conduct of the husband in this case.
The Agreement is vitiated by the husband’s unconscionable conduct and should be set aside.
Section 90K(1)(d) - Hardship
The wife also brings a claim within the terms of s 90K(1)(d) contending there has been a material change in circumstances since the making of the Agreement and that she or the child would suffer hardship if the Agreement is not set aside.
The wife in her written submissions points to the fact that at the time the parties entered into the Agreement they had no children albeit it was clearly contemplated they would, and that the Agreement makes no provision in the event they had a child. The parties have a child, the wife is the primary carer for the child and the husband spends time with the child each Saturday. The child has been diagnosed with Autism Spectrum Disorder and is in receipt of funding under the National Disability Insurance Scheme.
The wife points to the change in circumstances as a consequence of the birth of X where, as at the time of the Agreement she was in full-time employment, she is now not working and is in receipt of workers’ compensation payments and living in rental accommodation. The wife gives the following evidence:
39. [X] experiences sensory problems (particularly sensitivity to noise, which is further irritated by crowded places), behavioural issues in respect of emotional regulation, some comprehension and coordination issues as well as attention span issues. [X] is also allergic to gluten and dairy. [X] also requires occupational therapy, speech therapy, and further assistance to develop his learning social skills.
The wife also gives evidence of the medical and allied health support that she receives in relation to X.
The wife is critical of the husband’s willingness to contribute financially in circumstances where she says the evidence in cross-examination reveals that he would pay for the child’s private schooling but only if he is in Sydney and that he will pay expenses for X but only if the wife comes to Sydney.
It is undoubtedly the case that the Agreement makes no provision for the wife upon separation by way of financial adjustment under s 79. It is also undoubtedly the case that the wife is at present the primary carer of the child and but for time on a Saturday, she is the person who is entirely responsible for all of the physical care of the child. The husband adopts a view in relation to the payment of expenses for the child offering to pay on condition that the child reside in a particular location. The wife’s counsel submits that “the Court would have no confidence in his assertions as to supporting X into the future” (at paragraph 83). In my view, it is more likely that the husband will support X if his conditions for support are satisfied, namely that the child attends a private school in Sydney. There may have been some potency to the husband’s submission that the wife has not asked the husband for financial assistance but it is entirely removed when the husband’s requirements for support were made apparent in his cross-examination.
In my view, there is a material change in circumstances sufficient to warrant the Agreement being set aside under s 90K(1)(d). I reach that conclusion as a consequence of both the current care arrangements in relation to the child and the child’s disability. It clearly was not in contemplation at the time that they entered into the Agreement that upon a separation, the wife would assume almost all of the care of the child and that the parties would have a child with a disability. In my view, those matters constitute a material change in circumstances relating to the care, welfare and development of the child. I note that the Full Court in Fewster & Drake (2016) FLC 93-745 (“Fewster & Drake”) stated:
62.The birth of a child leads inexorably to his or her care, development and welfare. We do not see why a birth cannot be a material change in circumstances for the purpose of s 90K(1)(d). Whether it in fact is such a change will depend on all of the circumstances.
I next need to consider whether or not the wife and/or the child will suffer hardship if the Agreement is not set aside. The hardship to which the section is directed is the hardship caused by the change in circumstances and not hardship caused by the Agreement. As their Honours make clear in Fewster & Drake:
65.The husband correctly submits that the words “as a result of the change” indicate that the relevant hardship with which the section is concerned is the hardship which is caused by the change in circumstances. It is the changed circumstances which must give rise to the hardship, and not the agreement itself. It is to be recalled that, subject to compliance with the statutory requirements, people are free to enter such binding financial agreements as they see fit. There is no statutory provision which enables a binding financial agreement to be set aside merely because it is unfair: Hoult v Hoult (2013) 276 FLR 412 at 87,283 and 87,296-87,298.
…
67.We turn now to the second aspect of this challenge. The concluding words of s 90K(1)(d) are “if the court does not set the agreement aside”. Logically and inevitably those words require the court to undertake some comparison between the position of the child, or the person with caring responsibility, if the agreement remains in place and the position of that child or person if the agreement is set aside. It is only by doing so that the court can place itself in a position to determine whether there will be hardship if the agreement is not set aside. The primary judge did not undertake such a comparison.
It is undoubtedly the case that if the Agreement is not set aside then the wife does not have an application for property settlement. The wife’s assets are modest. She has property according to her Financial Statement having a value of $25,705 but liabilities of $40,000. She has superannuation of $119,000 but at her age is many years away from being able to access that. The husband’s assets including superannuation are valued according to his Financial Statement at in excess of $9.2 million.
The wife has been making contributions during the course of the relationship that commenced in or about 2007 and continues to make contributions given her caregiving role in relation to the child. The wife’s contributions span 15 years. Her contributions are significant as would be her claim under s 75(2). Notwithstanding the significant initial financial contribution of the husband, the wife would having regard to her contributions, the length of the relationship, the quantum of the pool as asserted by the husband and her meagre financial position, an entitlement to an adjustive order under s 79 if the Agreement is set aside.
Relevant to this enquiry is that the husband does not submit that the wife’s claim under s 79 is trifling or that the costs she would incur would be outweighed by the amount she would recover.
I find that the wife has a prima facie claim of significance under s 79 and consequently, consistent with what the Full Court said in Whitford and Whitford (1979) FLC 90-612, she would suffer a substantial detriment constituting hardship if she could not bring such a claim.
The husband seems to contend that the Court should not deal with the s 90K(1)(d) application as the current living arrangements for the child may change such that there may not be a material change in circumstances. I note this is but one aspect of the material change. With respect, that argument taken to its logical conclusion may forever deny such an application as on one view the living arrangements of a child are always open to review if there are changed circumstances. The better view is that the Court deals with the evidence currently before it.
The husband’s counsel submits that the wife’s income should be quantified at $970.50 per week net. That it is representative of her future income stream, is more than her income at the time of entry into the Agreement and is sufficient to meet her weekly expenses.
The difficulty with this submission, as far as it suggests that she is able to meet her weekly expenses, is that it is inconsistent with the evidence. Her Financial Statement lists her expenses at $1,247 per week ignoring an amount for tax. She thus has a shortfall of $276.50 per week.
The husband seems to suggest that the wife does not need to incur expenses for tutoring of $70 per week. Further, that the wife does not need to incur expenses of $220 per week for a psychologist and even if she does, there is a Medicare rebate such that the actual expense is $70.45 per week. The wife was not cross-examined on the need for a psychologist or whether a psychologist’s fees are rebatable under Medicare. In those circumstances, the platform for the submission is unsustainable in the absence of other evidence.
The husband submits that if the Agreement does not comply with s 90E, then the wife would be able to seek spousal maintenance, which it is said would alleviate her asserted hardship. It is a curious submission because the husband makes no such concession. The problem with this submission is that the hardship springs from the lost opportunity to pursue not just a claim for spousal maintenance but also a claim under s 79. The hardship does not just arise from a shortfall in income. A claim for spousal maintenance does not remedy or alleviate the inability to make a claim under s 79.
I am satisfied that the Agreement should be set aside under s 90K(1)(d).
90K(1)(b) set aside as Void, Voidable or Unenforceable – Uncertainty
The wife also brings a claim within the terms of s 90K(1)(b) on the ground that there is an uncertainty as to the terms of the Agreement.
It is contended that there are words contained in the Agreement that would lead to a conclusion that “it is not possible to attribute to the parties any particular contractual intention” (at paragraph 89)
No matter what might be the other problems with this Agreement, I do not accept that the Agreement is void or voidable for uncertainty. The Agreement is clear that there is no provision for an adjustment no matter what might be described as infelicitous drafting. The contractual intention is apparent.
The husband’s counsel submitted:
69.For abundant caution, even if the Court were tempted to the view that the Agreement is void, voidable or unenforceable by way of uncertainty, it is submitted that it cannot be said that the whole Agreement is void. Rather, certain and divisible portions would remain valid. Relevantly, Guild v Stasuik provided:
[102]To enliven that legal principle, on the proper construction of the relevant agreement it must be evident that the parties intended that the offending portion was severable or that the whole agreement must fail if the clause in question failed. So much was held by the High Court in Fitzgerald v Masters.
[103] Some important concepts may be distilled from the survey of the law of uncertainty recorded above. In no special order they are as follows —
a) as a starting point, the court must examine the impugned clause, clauses or the agreement as a whole to assess whether the relevant portion is, in fact and in law, uncertain for ambiguity or incompleteness;
b) if two constructions of the agreement are equally open, the agreement will not be struck down for uncertainty but rather, the court will construe the agreement according to the presumed intendment of the parties;
c) where the impugned portion of the agreement is said to be uncertain because it is impossible to give meaning to the clause, impossibility is not to be equated with difficulty of construction;
d) despite the presence of the essential terms of parties, price and subject matter, certain types of agreements import their own special requirements necessitating the presence of those requirements before it can be said that the agreement is certain; and e) even if a particular clause of an agreement is said to be uncertain, it may be possible to sever the impugned clause thereby preserving the agreement so long as it is possible to discern from the agreement that the parties intended the offending portion to be severed.
(As per the original)
(Footnote omitted)
However, having made that submission, I was not taken to which parts of the Agreement the husband said could be severable other than perhaps the part said not to be in compliance with s 90E.
Notwithstanding the same, I do not regard the drafting to be so infelicitous as to lead to the Agreement being uncertain and thereby void or voidable.
If the Agreement is not set aside pursuant to s 90K but is also not a financial agreement pursuant to s 90B, is it binding pursuant to s 90G(1) of the Act?
In the event that I am wrong in relation to my earlier findings, I will now consider the effect of s 90G and determine whether the Agreement is binding on the parties.
Section 90G provides as follows;
When 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 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.
(1A) A financial agreement is binding on the parties to the agreement if:
(a)the agreement is signed by all parties; and
(b)one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and
(c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and
(d)the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; and
(e)the agreement has not been terminated and has not been set aside by a court.
(1B)For the purposes of paragraph (1A)(d), a court may make an order declaring that a financial agreement is binding on the parties to the agreement, upon application (the enforcement application) by a spouse party seeking to enforce the agreement.
(1C)To avoid doubt, section 90KA applies in relation to the enforcement application.
(2)A court may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.
The party who asserts the Agreement is binding, in this case the husband, bears the onus of proof to establish that the Agreement complies with the provisions of s 90G(1).
Justice Thackeray observed in Hoult v Hoult (2013) FLC 93-546:
60.In my view, the onus of establishing that an agreement is binding falls upon the party asserting that fact because the legislation provides that an agreement is binding “if, and only, if” the prescribed matters are established. It follows that the party relying upon the agreement must establish the existence of all those matters, including the giving of the requisite legal advice to both parties.
61.I recognise the potential forensic difficulty faced by a party who seeks to uphold a financial agreement when the other party claims not to have received the prescribed legal advice. However, the fact there is difficulty in proving something within the knowledge of only the other party and their solicitor does not mean the legal burden of proof passes to the party who seeks not to be bound by the agreement.
62.Importantly, however, I consider that once the party seeking to rely upon the agreement produces in evidence the certificate signed by the other party’s solicitor, there is a forensic obligation on the other party to adduce evidence which would disprove, or at least throw into doubt, the inference or conclusion to be drawn from the certificate (especially when read with the recital in the agreement to the same effect).
63.This forensic obligation is properly conceptualised as the burden of introducing evidence and should not be confused with the burden of proof as a matter of law and pleading. For a discussion of the difference see Purkess v Crittenden (1965) 114 CLR 164 especially at 167-168 per Barwick CJ, Kitto and Taylor JJ and 170-171 per Windeyer J.
The certificate to the Agreement records as follows:
I … of … Solicitor,
hereby certify that, in relation to an agreement in writing proposed to be entered into between [Mr Canino] and [Ms Zella] (hereinafter called “the parties”), I advised [Ms Zella] (hereinafter called “my client”), independently of the other party and before the time at which my client signed the agreement, as to the following matters:-
1.Under Section 90B (Financial Agreements before Marriage) of the, Family Law Act, the matter of how (in the event of a breakdown of the marriage) all or any of the property or financial resources (owned by either or both of the parries at the time when the Agreement is made or acquired by either or both of them at a later time and before a dissolution of marriage) is to be dealt with. Also, the matter of maintenance during and after marriage.
2.The effect of this Agreement on the rights of the parties to apply to the Court for any order to set aside this Agreement under Section 90K of the Act, especially as to material changes in circumstances after marriage and any future children of the marriage.
3.Whether Section 90F (Centrelink Pensions) of the Act, as to the power and jurisdiction of the Family Court, applies to this Agreement.
4.The requirement of Section 90J of the Act for any future Termination Agreement and the need for a Certificate similar to this.
5.The meaning of Section 90H of the Act as to the effect of the death of a party to this Agreement, which still binds the legal personal representative of that party.
(As per the original)
It is clear from the ordinary reading of the certificate that it does not record the giving of advice as to “the effect of the agreement on the rights of that party” nor does it record the giving of legal advice about “the advantages and disadvantages to that party of making the agreement”. There is a complete absence in the certificate of the requisite advice.
The Chief Justice in Kaimal & Kaimal [2020] FamCA 971 in relation to the obligations of legal advice noted the following:
16.The requirement for legal advice is an important legislative safeguard. An effective binding financial agreement ousts the Court’s jurisdiction to make orders under Part VIII of the Act, allowing parties to deal with their assets without interference from the Court. Accordingly, the legal advice must be real and meaningful to satisfy s 90G(1)(b).
17.Section 90G(1)(b) evinces an unambiguous legislative requirement that, in order for an executed agreement to be binding, each party to a financial agreement must be given clear, independent legal advice specifically in respect to each of the matters mentioned therein. This is evidenced from its wording “the effect of the agreement on the rights of the party and the advantages and disadvantages to the party of entering into the agreement at the time the advice was provided”.
18.Importantly, s 90G(1)(b) contains a requirement for independent legal advice separately to the requirement of a signed statement of legal advice, which is found in s 90G(1)(c). Accordingly, evidence of the latter cannot have been intended to constitute determinative evidence of the former. If that were the case, the inclusion of a separate provision for each would be redundant.
19.The Court’s task in this case is to determine whether the wife received legal advice and, if so, whether it meets the requirements of s 90G(1)(b).
20.It is clear that, in order to be able to advise a party of the advantages and disadvantages of entering into a financial agreement and of how that financial agreement will affect their rights, it is necessary that those advantages, disadvantages and rights are first identified.
(Footnotes omitted)
With respect, I agree with the Chief Justice’s observation.
In relation to what the relevant rights are, Aldridge J in Abrum & Abrum [2013] FamCA 897 (“Abrum & Abrum”) observed the following:
36.A binding financial agreement deals with the parties’ rights in relation to the property or financial resources of the parties in a way that ousts the jurisdiction of the court to make orders in relation to that property or financial resource. Those rights thus ousted must be the rights that the parties had under s 79 of the Act to seek an order for the adjustment of the parties’ property rights. When making such an order the court takes into account the matters set out in s 79(4) of the Act (the parties financial and non-financial contributions to the property of the parties and their contributions to the welfare of the family) and the various matters set out in s 75(2) of the Act. The parties’ rights to obtain a property settlement thus depend on those factors.
37.It is true to say that a party does not have a “right” to a property settlement, or a “right” to a particular property settlement, because under s 79 the court is not giving effect to existing rights but rather is altering property interests in a manner that it considers is just and equitable and thus creates new rights. In doing so it evaluates and weighs many factors. It is necessarily an imprecise exercise.
38.Nonetheless, when s 90G(1)(b) speaks of “rights” it must be speaking of the entitlement to bring a case under s 79 and the factors that weigh in favour of that person’s case under ss 79(4) and 75(2) otherwise it would have limited meaning.
39.In order to give advice about the effect of an agreement on the rights of a party, that is their rights under the Act in relation to property, a legal practitioner must establish what those rights are at the time the advice is provided. This is because s 90G(1)(b) requires advice to be given on the effects of the agreement upon the rights of that party and the advantages and disadvantages of the agreement. If their rights are not known then it is impossible to advise as to the effect of the agreement on them.
40.It is unhelpful to advise a person that a financial agreement might adversely affect his or her rights if those rights are not identified. A party must know more than some unknown or undefined right is being given up. He or she must have some idea, at least in general, of his or her present entitlements or rights (to use the words of the section) with which he or she may compare the provisions of the proposed financial agreement. It is only in that way that there can be actual advice about the effect of the agreement on those present rights.
41.It is quite clear that a person may choose to enter into an agreement where he or she may very well be much worse off than if he or she were left to rely on their rights under s 79 of the Act. Thus, there is a requirement for specific legal advice to be given. That is the safeguard the legislature imposes when it permits the parties to deal with their property by agreement and without possible interference from a court.
42.Accordingly, the advice must be real and meaningful. It must be directed to the parties’ circumstances and their present rights.
43.Proper identification of a parties’ rights can only be done by identifying the property of the parties then held and a consideration of the parties contributions (financial and non-financial) to the acquisition of that property and to the welfare of the children. Any other relevant factors under s 79(4), including s 75(2), would then need to be considered. Only by doing so can advice be given that complies with the terms of s 90G(1)(b).
…
56.Section 90G(1)(b) requires advice to be given about “the effect of agreement on the rights of that party”. That is different to the “rights of the parties to apply for an order for property adjustment”. Similarly, the Act requires advice to be given about “the advantages and disadvantages” and not merely the “advantage, financially or otherwise” of entry into the agreement.
The only reference to rights in the certificates relates to s 90K and not to the wider basket of rights identified by Aldridge J.
The husband’s counsel submits:
70. It is submitted that the parties did receive the requisite legal advice pursuant to the requirements in s 90G(1)(b). Somewhat subversively, this was conceded by the wife:
You see, madam, what I’m suggesting to you is that you and [Mr B] did have conversations either in person or on the phone about the advantages and disadvantages of the agreement?--- Mr Batey, I’ve never spoken with [Mr B] on the phone.
What was my question? --- You were saying, Mr Batey, did I ever have conversations on the phone with [Mr B], and my answer is no.
I didn’t say just the phone. I also said in person?--- Could you please repeat the question.
Yes. Are you saying that you did not – well, I was putting to you that you had conversations with [Mr B] in person and on the phone about the contents of the financial agreement? --- We had it in person.
Is the answer yes or no? --- In person in regards to – in person is yes. In regards to the phone it’s no.
71. In short, the wife concedes she did receive advice as to the advantages and disadvantages of entering into the BFA. Implicit in being advised of the advantages and disadvantages and the content of the agreement is that the wife was at least generally advised of her present rights and future rights under the prospective BFA. It is submitted that this is implicit as the advice could not have otherwise proceeded in the absence of this. Advice as to the disadvantages and disadvantages of the content of the agreement cannot be given in isolated or quarantined from at least some general communication of one’s rights.
(Footnote omitted)
The husband’s submission mischaracterises the wife’s evidence and gives it a gloss, which is not there. It is simply wrong.
The wife does not concede that she had a conversation about the advantages and disadvantages of the Agreement. The husband’s counsel then changes the question from one about advantages and disadvantages to a question about whether they had a conversation about the contents of the Agreement, which she admits. The two propositions are very different.
It is a submission that does not assist the husband. What is necessary is legal advice about advantages and disadvantages and rights, not a conversation.
In circumstances where the wife does not concede the giving of the advice, the numerous submissions of the husband that are predicated on such an erroneous assumption cannot stand.
The wife in her written submissions records:
93. It is not in doubt that the Agreement has attached to it statements (self-described as ‘certificates’) by the respective solicitors expressed to be for the purposes of s.90G. Those statements however are not in compliance with the requirements of s.90G, neither strictly, nor in substance. The Wife further contends that the ‘certificates’ are not amenable to rectification.
(Footnote omitted)
I accept that submission. The husband has not discharged the onus that rests upon him. In those circumstances, no forensic onus shifts to the wife.
If I am wrong then the issue becomes what advice did the wife receive and does it accord with s 90G(1). There are four instances of advice, the certificate, the evidence given by the wife of the consultations on in late 2007 and the letter from her solicitor Mr B dated 25 October 2007. The wife’s solicitor Mr B has unfortunately died. He was therefore not available to give evidence.
The certificates do not comply with s 90G. The wife’s affidavit discloses the extent of the advice that she received. Nowhere in her affidavit is there evidence that accords with s 90G. At no time during the course of the cross-examination of the wife was it explored with her what the legal advice was that she received about her rights. As to the advantages and disadvantages of entering into the Agreement, the only cross-examination is that referred to above.
The highest the cross-examination of the wife went in relation to the advice that she received was taking the wife to Mr B’s letter of 25 October 2007, which recorded:
As advised you would always be able to claim child support but not financial support for yourself in that situation.
The wife was cross-examined about this paragraph and denied that Mr B gave her that advice.
A reading of Mr B’s letter would seem to suggest that at its highest it records that the Agreement makes no provision for her should a separation occur in the future, that it does not properly consider her financial needs and that she would not be able to claim financial support upon separation. In my view, the letter does not establish sufficiently that the wife was given advice as to her rights consistent with the observations of Aldridge J in Abrum & Abrum. At its most generous, it might highlight the disadvantages but it does not identify the advantages to her of entering into the Agreement.
I am satisfied that the wife has comfortably met the forensic onus, assuming that it shifted to her, that she did not get the requisite advice. It was not established through cross-examination that she had.
Accordingly, I conclude that the Agreement is not binding within the meaning of s 90G(1).
If the Agreement is not binding pursuant to s 90G(1) ought it nonetheless be declared binding pursuant to s 90G(1A) of the Act?
I turn to consider the provisions of s 90G(1A).
The husband contends that I should find that it would be unjust and inequitable if the Agreement were not binding on the parties.
In Hoult & Hoult, the Full Court constituted by Strickland and Ainslie-Wallace JJ recorded some of the factors to be considered in such a determination:
307.We have referred to the fact that his Honour in paragraph 57 provided a range of factors that it would be appropriate to consider when exercising the discretion. The only factor that we suggest is not available is the last one, but if there is to be a list of factors identified we would prefer the following, all of which are to be found in his Honour’s reasons:
•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).
…
309.Secondly, it is suggested that “[a]lthough the Act now undoubtedly allows parties to enter into bad or grossly unfair bargains, it is perfectly consistent for the legislation to permit consideration of the fairness of the bargain (judged at the date of execution) in cases where the safeguards in s 90G(1) have not been met”.
310.Again with the greatest of respect to his Honour we fail to see how that can be. The point of the legislation is to allow the parties to decide what bargain they will strike, and provided the agreement complies with the requirements of s 90G(1) they are bound by what they agree upon. Significantly, in reaching agreement, there is no requirement that they meet any of the considerations contained in s 79 of the Act, and they can literally make the worst bargain possible, but still be bound by it. Thus, again, rhetorically, how can the fairness of the bargain be an enquiry that the court can make when it is seized of a matter under s 90G(1A)? Furthermore, it is not the case that to fail to consider the fairness or injustice of the bargain does not mean that “the discretion is exercised in a vacuum”. The factors set out in paragraph 307 above will be those that are addressed.
I note the observations of the Chief Justice in Kaimal and the importance placed on the obtaining of legal advice in the context of the legislation.
The importance of independent legal advice is one of the features of the Act in relation to financial agreements. It is a protection that the legislators have inserted into the Act as a safeguard where an agreement, if binding, deprives the Court of the power to make an order for financial adjustment.
I have found that the wife was not given the advice that s 90G(1) requires. The lack of proper advice is significant. I cannot conclude that the wife was able to properly assess her s 79 rights and how the Agreement might be to her advantage or disadvantage. The non-compliance with s 90G is substantial.
I note that the husband places significant weight on the instructions by the wife that she wished to enter into the Agreement and further that she did not wish to make a claim on the husband’s property. I have considered those matters.
The husband does not adduce any evidence that he has done anything in reliance upon the Agreement that was to his detriment.
On balance, I find that it would not be unjust and inequitable if the Agreement were not binding on the parties based upon the absence of advice as to the wife’s rights and the advantages and disadvantages to her of entering into the Agreement. In the context of the legislative provisions as to legal advice, the observations of the Chief Justice referred to earlier and the absence of any evidence or submission that the husband acted to his detriment in reliance upon the agreement I conclude that that it would not be unjust and inequitable if the Agreement were not binding on the parties.
I note in passing that the husband does not seek a declaration in the terms of s 90G(1A)(d).
If the Agreement is not set aside and is either binding or declared to be binding, are the parts of the document which relates to the provision of maintenance to the wife void pursuant to s 90E of the Act?
The answer to this is in the affirmative. The provision is void.
Section 90E provides:
Requirements with respect to provisions in financial agreements relating to the maintenance of a party or a child or children
A provision of a financial agreement that relates to the maintenance of a spouse party to the agreement or a child or children is void unless the provision specifies:
(a)the party, or the child or children, for whose maintenance provision is made; and
(b) the amount provided for, or the value of the portion of the relevant property attributable to, the maintenance of the party, or of the child or each child, as the case may be.
The only provision of the agreement that deals with maintenance is clause 14 which provides:
14. [Mr Canino] and [Ms Zella] acknowledge that this Deed is intended to operate in substitution for all rights of either party to claim spousal maintenance, property orders or declarations under the Family Law Act, and at Common Law, other than as specified in this Deed.
It is clear on an ordinary reading of clause 14 that it does not comply with the legislative requirements. It does not identify the party whose maintenance is considered nor the amount or value of property that is attributable to the maintenance of that party.
The husband sought to rely upon the observations of Strickland J sitting as the Full Court in Ellerton & Jennings (2021) FLC 94-059 (“Ellerton”).
In Ellerton at first instance, the Court dealt with a provision in a financial agreement that stated:
29. The relevant clauses of the BFA in relation to spousal maintenance are:
19.The parties acknowledge that they are currently self-sufficient and capable of supporting themselves, and that no provision of spousal maintenance is necessary or desired.
…
Justice Strickland at [30] of the judgment observed the findings by the trial judge as follows:
30.…
10.… I agree with Ms Boyle. The phrase “no provision of spousal maintenance is necessary or desired” must be read at face value. It includes a clear intention that no amount of spousal maintenance is to be paid. This does not require that the parties’ intention be further defined as “zero spousal maintenance”, “nil spousal maintenance” or any other similar phrase. …
Further on, Strickland J, referred to the trial judge’s observations as follows:
30. …
12.… This contrasts with clause 19, which makes it clear that there is to be no provision of spousal maintenance – and no provision must mean nil, zero, none. I conclude that clause 19 in relation to spousal maintenance does meet the requirements of s.90E and is not void for that reason.
(Emphasis in original)
In his Honour's judgment at [37], he said: “There is a clear difference between a clause that provides for no claim to be made, and a clause that in effect specifies that there is no provision for spousal maintenance”.
At [38], his Honour asserted: “For example, there is ‘an identifiable quantum’, namely ‘no provision’, and there is ‘precise reference to an amount’, namely, again, ‘no provision’”.
Again, his Honour said:
40.As the primary Judge implied in [10], and observed in [12], it means the same as the words “zero”, “nil”, or “none”, but it is unnecessary to use those words. An amount can be “zero”, “nil” or “none”, or as here, “no provision”, and still be “an amount”.
Ellerton (supra) is not supportive of the husband’s argument. Clause 14 does not specify the party for whose provision maintenance is to be made nor does it reference in any way an amount or value. It only refers to a substitution of rights.
I find that Clause 14 is void.
Conclusion
In light of my findings, I conclude that the Agreement made on 26 October 2007 should be set aside.
I will make orders accordingly.
I certify that the preceding two hundred (200) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 11 May 2022
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