Sunday, 20 February 2011

Family Court: BFA legal changes binding

The Family Court has upheld the constitutional validity of changes to the Family Law Act which affect binding financial agreements. It did so in a case where the husband wanted to ensure that the financial agreement he and his wife had signed just before marriage in 2005 was not binding, so that he would not have to pay his wife in excess of $3 million from his $16 million fortune.

Justice Benjamin, in the recent case of Wallace and Stelzer, was asked to decide if the financial agreement were binding, and that the changes to the Family Law Act were invalid.

If the changes had been invalid, then the effect of a Full Court of the Family Court decision of Black and Black would have applied. That decision, ironically enough an appeal from Justice Benjamin, stated in effect that if there were any defect in the form of a financial agreement such that there had not been strict compliance with the requirements of the Family Law Act, then the agreement was not binding. The Full Court in Black and Black had rejected Justice Benjamin's view that substantial compliance was sufficient.

The changes to the Family Law Act effective from 1 January 2010 changed the rules so that in effect substantial compliance was sufficient.

The problem with the agreement, identified by the husband, was that it was signed (albeit at his request) only a few days before marriage. He and his then partner had been in a de facto relationship for 7 years. The husband had paid out several million dollars to his previous wife on property settlement, and was the driving force to ensure that a binding financial agreement was entered into.

The husband originally proposed to pay the wife just over $1 million if the marriage broke down, to increase over time. The wife rejected that, the parties settling on just over $3 million if the marriage broke down in the first 4 years. After about 2 years of marriage the parties separated permanently.

The husband contended that his solicitor was negligent in allowing the deal to proceed.

Financial agreement are required to have certificates signed by the lawyers attached to them. In 2004, the form of the certificate changed. Although the solicitors originally intended to sign the 2004 certificates, somehow the certificates signed by them were the wrong ones: pre-2004. This meant that technically the agreement was not binding. If Black and Black were the law, then there was a chance that the agreement might be set aside. Under the 2010 changes, the agreement would likely be binding.

The husband's arguments

1. The agreement was not binding.


The parties were required before signing the agreement to have obtained legal advice. The judge found that this had happened. His Honour stated:

  1. In Ruane v Bachmann-Ruane & Anor [2009] FamCA 1101, Cronin J discussed the need to obtain legal advice on entering a financial agreement. This is seen in the context of the provisions of s 90G which were prior to the 2010 amendments. In that case his Honour said:-[68]
In addition, the plain reading of s 90G is for the parties to obtain legal advice. It does not follow that the advice has to be accepted or followed nor for that matter, for the advice to be correct. The purpose of the provision is to ensure the parties understand not only the rearrangement of property and financial resources but also that rights are being affected. Those rights include exclusion of access to the courts and subject to certain exceptions.
  1. That approach was adopted by Strickland J in Parker v Parker [2010] FamCA 664 (3 August 2010). In his reasons, Cronin J approved reasoning of Coates FM in Murphy v Murphy [2009] FMCAfam 270 where his Honour determined a legal practitioner meant a person entitled to practice in the jurisdiction. It is clear to me that the purpose of the legislation is to ensure that a legal practitioner must be licensed and entitled to practice in a state or territory in the Commonwealth of Australia. That legal practitioner does not need to be a specialist and was intended to come from the broad church of legal practitioners as I said in Black & Black (supra). I am satisfied that both practitioners were licensed legal practitioners in the state of New South Wales.
  2. I take judicial notice that legal practitioners from the states and territories of the Commonwealth of Australia are licensed. To obtain such a licence legal practitioners need to undertake years of academic study and practical legal training both in an academic sense and in a practical sense. Legal practitioners are generally required to undertake compulsory professional education each year and are governed by rules and codes of professional standards. Those codes of standards are managed by law societies, bar associations and legal services commissioners. In addition legal practitioners are required to have compulsory professional indemnity insurance.
  3. As I indicated earlier, it is not a matter for this Court to investigate or inquire as to the adequacy or otherwise of the legal advice provided to the parties. If that legal advice was lacking in any particular way, the parties each have their rights against their legal practitioner. I repeat, that this comment is not to be regarded as a criticism of either legal practitioner.
  1. The evidence of Mr Samews [ the husband's solicitor] was that he provided some advice and he provided a certificate which asserted the advice that was provided. More importantly each of the parties made the following written warranties in the Agreement:-[69]
    1. Each party has sought, obtained and given due consideration to individual and independent advice from a separate qualified legal practitioner and prior to executing this agreement as to the matters including but not limited to:
(i) the effect of this Agreement on the rights of each party to apply for property and maintenance orders under provisions of the Act as amended and otherwise to seek relief in law under equity.
(ii) the advantages and disadvantages at the time the advice was provided, for each party to enter into this agreement.
  1. That was an assertion made by each party to the other and each party is entitled to rely on the assertion by the other party.
  2. Whilst the certificates were not those required under the 2004 amendments, they provided statements by each of the solicitors that they advised their respective clients independently of the other party and before each client signed the Agreement as to the following matters:-
    1. The effect of the financial agreement on the rights of that client
    2. Whether or not at the time it was to the advantage, financially or otherwise, of such client to make the Agreement
    3. Whether or not, at that time, it was prudent for the client to make that Agreement, and
    4. Whether or not at that time in the light of such circumstances as were at the time reasonably foreseeable, the provisions of the Agreement were fair and reasonable.
  3. Each of the parties was entitled to rely upon those assertions and having regard to the evidence of each of the solicitors.
His Honour stated: 
  1. It is clear that at the time the Agreement was executed its terms and provisions were well known to the husband and in his conscious thought. At that time he believed that he was bound by it. Subsequent to September 2005 and after separation the husband was advised that the certificate attached to the Agreement was incorrect in form and he decided to challenge the agreement.
  2. I am satisfied that the husband received independent advice from a qualified legal practitioner prior to executing the Agreement as to matters including but not limited to:-
    • (a) the effect of the Agreement on the rights of each party to apply for property and maintenance orders under the provisions of the Act and otherwise to seek relief at law and in equity;
    • (b) the advantages and disadvantages at the time the advice was provided, for each party to enter into the Agreement.
  3. I am satisfied that the husband initially required that the Agreement be executed prior to his marriage to the wife and in time the wife adopted a similar view. The husband was a man of significant wealth and in his evidence he acknowledged his concern about what he perceived as his financial difficulties he had with his former wife after the breakdown of his first marriage.
  4. I am satisfied that the husband understood the nature and effect of the Agreement. The husband was experienced in business and matters of finance and had legal advice. I am not satisfied that there was any material misrepresentation made to the husband about the purpose and effect of the Agreement. The husband clearly knew that the Agreement was intended to be a binding financial agreement under the Act which would set out the rights of the parties in the event of divorce. The Agreement was drafted at his instigation.
  5. The wife ought not to be criticised for endeavouring to advance her position as much as possible having regard to the commitments she had made to the relationship and the length of time the relationship had existed. Any alleged representations made by the wife were unremarkable in the context of a medium to long relationship. The representations in about July, August and September 2005, were as asserted by the wife and did not engender, in the husband’s mind, a false atmosphere of crisis.
  6. The husband claims that he was infatuated by the wife and that he was emotionally or pathologically dependent upon her. I think not, this was a couple who had been together for about seven years in mid 2005 and whose relationship was under some pressure. These adults worked out their then difficulties and made a change (i.e. their wedding) which they both believed would enable the relationship to continue into the future. The husband was worried about the financial impact of that decision and required the wife to enter into a financial agreement (which in itself is evidence of him exercising a free will). The wife had been out of paid employment for many years and was likewise concerned about her financial future. These two mature adults did precisely what the legislature recommended when it enabled binding financial agreements in 2000, that is, the parties carefully and thoughtfully considered what should happen in the event of their relationship breaking down. They did so with the benefit of legal advice. The husband was capable of applying independent thought. Whilst the Agreement was signed shortly before the wedding, it was not signed in an atmosphere of crisis or threat.
  7. The wife’s evidence, which I accept, is that the husband indicated to her that he would not marry her unless she signed an agreement. 
Section 90G of the Family Law Act

This section sets out the technical requirements of  financial agreements. The section was added to the Family Law Act in 2000, changed in 2004 and changed (including retrospectively) in 2010.

Item 8A of the 2010 changes provided:
8A Transitional—agreements made on or after 14 January 2004 and before commencement
(1) Sub items (2) and (3) apply in relation to a financial agreement made on or after 14 January 2004 and before the commencement of this item.
(2) Paragraph 90G(1)(b) of the Family Law Act 1975, as in force during that period, is also taken to be satisfied in relation to a spouse in relation to the agreement if, before signing the agreement, the spouse party was provided with independent legal advice from a legal practitioner about:
(a) the effect of the agreement on the rights of that party; and
(b) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
(c) whether or not, at that time, it was prudent for that party to make the agreement; and
(d) whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(3) Paragraph 90G(1)(c) of the Family Law Act 1975, as inserted by this Act, applies in relation to the agreement as if the reference in that paragraph to the advice referred to in paragraph (b) included a reference to the advice referred to in sub-item (2) of this item.

Senior Counsel for the Attorney-General submitted:

Transitional Item 8A seeks to remedy the situation where the advice provided to one party or both parties to an agreement made after the commencement of the 2004 Amendments, but before 4 January 2010, was in the terms required by the 2000 Act (see para 8 above), rather than that required by the 2004 Amendments (see para 9 above). That is, in addition to item 8, item 8A(2) is intended 'also' to operate to 'validate' agreements made during this period where advice was provided.


In other words, where solicitors had used the 2000 certificate after the 2004 changes but before 2010, then that should be OK.

Justice Benjamin stated:

Despite item 8(6), item 8A(3) appears to apply s 90G(1)(c) (but not s 90G(1)(ca)) as amended by the 2010 Amendments retrospectively. This creates a further difficulty as it suggests that a requirement is imposed which did not apply at the time an agreement was entered, namely that a statement be provided by solicitors to their clients, either before or after the agreement was signed. Extrinsic materials can be used in certain circumstances to interpret provisions,[21] but cannot be used to construe a legislative provision unless the construction of the provision suggested by that material is one that is 'reasonably open'.[22] Nevertheless, in appropriate circumstances, courts may consider the underlying purpose and context of legislation (see s 15AA of the Acts Interpretation Act 1901), to construe provisions so as to avoid absurd, incongruous, capricious or irrational consequences.[23] The purpose of the 2010 Amendments was to 'relax certain technical requirements ... for financial agreements to be binding'.[24] It would directly contradict this purpose to retrospectively impose new requirements. To the extent that item 8A(3) can be read so as to impose an additional requirement for a binding agreement which did not apply at the time the agreement was made, the Attorney-General submits that this was not the Parliament's intention and that the provisions should not be interpreted to produce such an incongruous result.
Three potential ways that the agreement could have effect under section 90G

The first way- s 90G(1) and Item 8

His Honour stated: 

  1. It was argued by both senior counsel for the Attorney-General and for the wife that the agreement would be binding if:-
    1. It was signed by all parties.
    2. 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
    3. The agreement has not been terminated and has not been set aside by a court.
  2. Obviously there needs to be evidence of those matters. Having regard to my findings particularly in respect of the evidence of the wife, the husband (including my concerns about his evidence on the advice with which he was provided) and the evidence of the legal practitioners, I am satisfied that the Agreement was signed by all parties, and that 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. I am satisfied that the Agreement has not been terminated and/or has not been set aside by a court. The provisions of s 90K have been satisfied in terms of this Agreement and I determine that it is a financial agreement, binding under the provisions of the Act.
The second potential way the Agreement can have effect under part VIIIA of the Act
  1. It was submitted by senior counsel for the Attorney-General that the second alternative is that the Court’s jurisdiction under s 90G(1A) [the 2010 changes] could be enlivened if the requirements in s 90G(1)(b) (set out above) had not been met. In those circumstances, in enforcement proceedings, it would be open to a court to declare the Agreement to be binding on the parties under s 90G(1A) if it is satisfied that it would be an unjust and inequitable if the Agreement were not binding. Such an agreement would be binding if :-
(a) It was signed by the parties; and
(b) The requirements in s 90G(1)(b) were not met.
(c) The Court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding the changes to the circumstances from the time the Agreement was made).
(d) The Court makes an appropriate order; and
(e) The agreement has not been terminated and has not been set aside by a court.
  1. If I am incorrect in terms of the first potential way the Agreement could have effect, then this section is available to me.
  2. In the factual circumstances of this case it would be unjust and inequitable if the Agreement was not binding on the spouse parties to the Agreement. The parties had made an agreement after about seven years of cohabitation, which agreement was their mature and considered approach to their respective finances and in light of legal advice. The incorrect certificate was a clerical oversight and in fact a correct certificate was included in the first draft. The whole thrust of the legislation was to ensure that parties had independent legal advice, and in this case they did.
  3. I would have made an order under s 90G(1A) if not for the finding and determination made earlier.
The third potential way in which the Agreement can have effect under Part VIIIA of the Act
  1. Transitional Provision 8A only applies to agreements made after 14 January 2004 and before 4 February 2010, which is of course the period in which the Agreement was made. Item 8A applies according to its terms and for the Agreement to be binding having regard to that provision the Agreement needs to:
    1. Be signed by all parties
    2. By operation of item 8A(2), before signing it, the spouse parties were provided with independent legal advice from a legal practitioner about:
      • (a) the effect of the agreement on the rights of that party; and
      • (b) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement; and
      • (c) whether or not, at that time, it was prudent for that party to make the agreement; and
      • (d) whether or not, at that time and in the light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
    3. By operation of item 8A(3) if it applies, either before or after signing it, each spouse party was provided with a signed statement by a legal practitioner stating that the advice referred to in the paragraph above was provided to that party (whether or not the statement is annexed to the agreement); and
    4. The agreement had not been terminated and had not been set aside by a court.
  2. Senior counsel for the Attorney-General observed that there were some difficulties in terms of the construction with item 8A in particular regarding the phrase ‘as enforced during that period’ and the word ‘also’. The Supplementary Explanatory Memorandum stated that the item[26]:-
...which will provide for additional circumstances in which a financial and termination agreement made on or after 14 January 2004 and before commencement of item 8A will bind the parties to the agreement. Amendments to the Family Law Act 1975 which commenced on that date changed the matters about which spouses had to obtain prior independent legal advice for the agreement to bind them. Some legal practitioners continued to rely on old precedents relating to the provisions of the Act as they stood before 14 January 2004 for agreements made for some time after that date. Sub-items 8A(2), 8A(3), 8A(5) and 8A(6) will provide that the agreement binds the spouses if the prior independent legal advice obtained by one or both spouses was about matters on which advice was required under the Act to be obtained before 14 January 2004.
  1. Senior counsel for the Attorney-General submitted that there were a number of possible constructions of item 8A(3) which seems, on the face of it, to impose an additional requirement. This flies in the face of item 8A(6) which removes the requirement that there be a signed statement by a legal practitioner.
  2. Item 8A(3) is difficult to interpret. One possible interpretation is that it does add back that requirement. However, senior counsel for the Attorney-General submitted this cannot be right as it does not make sense. Having regard to the submissions of senior counsel for the Attorney-General I accept that item 8A(3) does not reintroduce the requirement and I accept his submissions that:-[27]
Despite item 8(6), item 8A(3) appears to apply s 90G(1)(c) (but not s 90G(1)(ca)) as amended by the 2010 Amendments retrospectively. This creates a further difficulty as it suggests that a requirement is imposed which did not apply at the time an agreement was entered, namely that a statement be provided by solicitors to their clients, either before or after the agreement was signed. Extrinsic materials can be used in certain circumstances to interpret provisions,[28] but cannot be used to construe a legislative provision unless the construction of the provision suggested by that material is one that is 'reasonably open'.[29] Nevertheless, in appropriate circumstances, courts may consider the underlying purpose and context of legislation (see s 15AA of the Acts Interpretation Act 1901), to construe provisions so as to avoid absurd, incongruous, capricious or irrational consequences.[30] The purpose of the 2010 Amendments was to 'relax certain technical requirements ... for financial agreements to be binding'.[31] It would directly contradict this purpose to retrospectively impose new requirements. To the extent that item 8A(3) can be read so as to impose an additional requirement for a binding agreement which did not apply at the time the agreement was made, the Attorney-General submits that this was not the Parliament's intention and that the provisions should not be interpreted to produce such an incongruous result.
The Attorney-General therefore submits that item 8A has the effect that an agreement made after 14 January 2004 but before 4 January 2010, will be binding if, before signing the agreement, the parties were provided with advice in terms of s 90G(1)(b) as inserted by item 2 of the 2010 Amendments, or were provided with advice in terms of item 8A(2).
Having regard to the submissions by senior counsel for the Attorney-General in respect to these provisions, I am satisfied that the Agreement is one to which item 8A applies and that as such the parties were provided with advice in terms of s 90G(1)(b) [as inserted by item 2 of the 2010 Amendments] and I am satisfied that each of the parties was provided with advice in terms of item 8A.
The first Constitutional argument

His Honour held:

The 2010 Amendments do not interfere with the judicial process itself, nor effect a 'usurpation of judicial power' as found in Liyanage v The Queen.[39] These legal proceedings are not mentioned in the 2010 Amendments. The purpose and effect of the 2010 Amendments is to establish a revised general legal regime concerning agreements, binding on all relevant persons including the Applicant (husband), but not directed at him. The Amendments are not the equivalent of a bill of attainder nor a bill of pains and penalties. Part VIIIA has always provided the criteria for an agreement, and for a court to resolve disputes as to whether the criteria have been met. Adjustment of the criteria is not interfering with the judicial process itself. Further, the 2010 Amendments provided a court with a new broad discretion under the new s 90G(1A)....

I am not satisfied that this is an interference with the judicial power asserted on behalf of the husband. It is certainly an adjustment to the underlying rights of the parties but it does not in any way interfere with the Court’s ability to determine the proceedings that are before it. The 2010 amendments contain broad discretion which is contrary to that in Liyanage’s case (supra). Therefore the legislation does not tell the Court how to deal with a particular matter and how to deal with particular parties. I therefore reject that argument and accept and adopt the submissions made on behalf of the Attorney-General and the wife in that regard.
The second Constitutional Argument

His Honour stated:

  1. The second Constitutional argument was described by senior counsel for the husband as ‘not the strongest part of their argument’ or similar. I agree with that analysis.
  2. The husband submitted that the effect of the amendments was that there had been an acquisition of property on other than just terms, which was inconsistent with s 51(xxxi) of the Constitution. There appear to be two foundations upon which this is claimed. The first is that the husband’s right to have the Agreement treated as not binding was the husband’s right in itself or by reason of the additional liability the husband would have if the Agreement was binding. It was suggested that both of these were property which had been acquired.
  3. Section 51(xxxi) of the Constitution provides that the Parliament has powers to make laws in respect to:-
The acquisition of property on just terms from any state or person for a purpose in respect of which the parliament has power to make laws.
  1. It was agreed that generally, a Commonwealth law that gives rise to an acquisition of property will be invalid unless it provides just terms for the persons from whom the property is acquired. It was not an issue that the concept of ‘property’ in s 51(xxxi) of the Constitution ‘is not to be confined pedantically... to some specific estate or interest in land recognised in law or in equity ... but ... that it extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property.’[43] It is also established that property ‘as used in s 51(xxxi) of the Constitution extends to ‘every species of valuable right and interest’.[44] The High Court has described property for the purpose of s 51(xxxi) as ‘a bundle of rights’ or ‘a legally endorsed concentration of power over things and resources’.[45] Senior counsel for the Attorney-General asserted:-[46]
The legal position that an Agreement which does not comply with s 90G is not binding on the parties to the Agreement is not 'property', an 'interest' or a 'right' in this sense.
The liability which arises under the Agreement, however, could be property in this sense. The Applicant (husband) argues that apart from the 2010 Amendments, he would not have been bound by the Agreement, and therefore, the effect of the 2010 Amendments is to impose a liability that did not otherwise exist. It is argued that the imposition of this liability by the 2010 Amendments is an acquisition of property because it confers a benefit, equivalent to the liability, upon the wife.[47]
This argument ignores the fact that both the husband and wife intended to be bound by the Agreement. The husband intended to enter into the Agreement, and intended that it be binding. If the Agreement was however invalid, the 2010 Amendments may merely remedy this technical deficiency, and give effect to the parties' intentions.
The 2010 Amendments do not create a completely new liability without reference to the parties' intentions. The true source of the husband's liability is his agreement with the wife, and the subsequent execution of the Agreement. The 2010 Amendments merely give effect to that Agreement. Accordingly, there has been no 'acquisition' on other than just terms because the parties intended and agreed this to be the position.[48]
If, contrary to these arguments, there is any doubt that the 2010 Amendments did acquire property on other than just terms, the Attorney-General makes the following submissions as to why they do not infringe s 51(xxxi) of the Constitution.
  1. Essentially this is not an acquisition of property. The liability of the husband arises from his agreement. He agreed to pay the money to the wife and he himself is the source of the liability. Senior counsel for the husband submitted that “all the legislation had done was to give statutory force to the Agreement” and referred me to a decision of Stephen J in Trade Practices Commission and Another v Tooth & Co Limited and Another (1979) 142 CLR at 416 where his Honour said the following:-
... it is now well established that pl.(xiii) contemplates “acquisition by the method of requisition” not by “the method of agreement”. ...
  1. Senior counsel said the fact was that the husband had agreed to pay the money. He went on to say “whatever the effect under the Family Law Act, whether that was a binding agreement under the Family Law Act which ousts the jurisdiction or not, in terms of the underlying constitutional argument being required to meet that obligation can’t be an acquisition of property on other than just terms, because it’s a liability which he had incurred of his own volition and was not forced on him by requisition”.[49]
  2. The second submission regarding s 51 (xxxi) relates to s 51(xxii) which manifests the contrary intention excluding s 51(xxxi). Mason CJ noted in Mutual Pools v Staff Pty Ltd[50] that s 51(xxxi) is a constitutional guarantee and operates to abstract power from other provisions of the Constitution conferring power, however, subject to those other provisions manifesting a contrary intention. His Honour noted by way of example that the laws providing for the free sequestration of property of a bankrupt and forfeiture of prohibited imports or proceeds of crime, the application of enemy property or reparations and the imposition of taxation are not fairly characterised as laws for the acquisition of property. Submissions by senior counsel for the Attorney-General, which I accept, were:-
In Mutual Pools & Staff Pty. Ltd. v The Commonwealth,[51] Mason CJ noted that s 51(xxxi) is a constitutional guarantee and operates to abstract power from other provisions of the Constitution conferring power, however, subject to those other provisions manifesting a contrary intention. His Honour noted by way of example that laws providing for the sequestration of the property of a bankrupt, the forfeiture of prohibited imports or the proceeds of crime, the application of enemy property as war reparations and the imposition of taxation are not fairly characterised as laws for the acquisition of property. In Nintendo Co Ltd v Centronics Systems Pty. Ltd.,[52] Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ accepted Mason CJ's reasoning in Mutual Pools, and noted that the copyrights power under s 51(xviii) manifested (in limited circumstances) a contrary intention which excluded the operation of s 51(xxxi).
The power of the Court to alter the property interests of parties subject to its jurisdiction under Parts VIII and VIIIA of the Family Law Act is a valid enactment under the constitutional power conferred upon the Commonwealth Parliament by s 51(xxi) of the Constitution, with respect to marriage, and s 51(xxii) with respect to divorce and matrimonial causes. The marriage and divorce powers of the Commonwealth contemplate that the Parliament will determine how property of parties to the marriage will be dealt with on dissolution of the marriage. They contemplate that the Commonwealth may provide when agreements between the parties to the marriage can deal with matters relating to their property, and can confer upon the judiciary a power to adjust property interests upon the dissolution of a marriage depending on the existence of such an agreement. Any law about when such an agreement operates necessarily involves matters concerning the rights of the parties to that agreement, and to any property which is the subject of the agreement. Insofar as they support such laws about when there can be such an agreement, the marriage and divorce powers manifest a 'contrary intention' in this respect in the sense described in Mutual Pools and Nintendo ousting the application of s 51(xxxi)....
The third submission was that agreements are inherently susceptible to legislative variation. In that regard the submissions made by senior counsel for the Attorney -General were:-[54]
The jurisdiction of the Court respecting adjustment of property as between spouses is well known. Under former marriage legislation (e.g. Matrimonial Causes Act 1959), parties could not by agreement oust the jurisdiction of the Court. Part VIII of the Family Law Act previously reflected this traditional position.
The ability to have binding financial agreements which oust the jurisdiction of the courts was conferred by Part VIIIA of the Family Law Act in 2000. It is a right that exists exclusively by force of the statute.[55] It is correct that not all modifications of statutory rights are removed from the scope of s 51(xxxi).[56] Mining interests are a statutory right which can be property for this purpose.[57] But where the statutory rights are of a nature which renders them liable to variation, such a variation is not subject to s 51(xxxi). It is the nature of the rights which determine this.[58]
...
  1. The fourth submission was in respect of the adjustment of competing rights, claims and obligations which senior counsel for the Attorney-General made the following submissions:-[61]
It was observed in Mutual Pools,[62] and decided in Nintendo,[63] that a law 'which is not directed towards the acquisition of property as such, but which is concerned with the adjustment of competing rights, claims or obligations of persons in a particular relationship or area of activity, does not attract the operation of s 51(xxxi)'.
As noted by the Full Court of the Family Court in B v B:[64]
The underlying philosophy that had guided the courts in enunciating that principle was seen to place too many restrictions on the right of parties to arrange their affairs as they saw fit. The compromise reached by the legislature was to permit the parties to oust the court's jurisdiction to make adjustive orders but only if certain stringent requirements were met. [Emphasis added.]
  1. The 2010 Amendments were not directed towards the acquisition of property as such. They were concerned with the adjustment of competing rights of parties to a marriage on dissolution of that marriage. The 2010 Amendments reflect a further adjustment to the compromise reached by the Parliament as to when people should be allowed to arrange their affairs and deal with rights on dissolution as they see fit in an agreement, and when they should not, and the jurisdiction of the courts to make adjustive orders.
  2. Part of the complaint made on behalf of the husband was that he had the right to make a claim for negligence against his solicitor. In that regard, senior counsel for the Attorney-General submitted:-[65]
The Applicant frames part of his argument that the 2010 Amendments effect an acquisition of property on other than just terms on the basis that they conferred a benefit in favour of the negligent solicitors who drafted the Agreement and provided the certificates annexed to it.[66]
The 2010 Amendments have no effect on whether the solicitors acted negligently, and the ability to sue for such negligence.
The 2010 Amendments may affect the loss flowing from any negligence, but this cannot amount to an acquisition of property requiring the provision of just terms.
The husband relies on Georgiadis v Australian and Overseas Telecommunications Corporation[67] in support of the argument that the Commonwealth has, by the 2010 amendments, destroyed a cause of action, amounting to an acquisition of property. The relevant provision at issue in Georgiadis, s 44(1) of the Compensation (Commonwealth Employees) Act 1971, provided that subject to some limited exceptions, 'an action or other proceeding for damages does not lie against the Commonwealth ... in respect of an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth ... would, but for this subsection, be liable ...'. There is nothing in the 2010 Amendments which similarly extinguishes any cause of action for negligence against solicitors.
  1. Senior counsel for the wife supported and adopted the submissions of senior counsel for the Attorney-General. In respect of the complaint by the husband as to the loss of his legal rights against his solicitor, senior counsel for the wife observed that the right was not terminated but that the quantum of the claim, if any, changed. As for the husband, his claim was that his solicitors had given him no advice or defective advice. If that were correct, that action still remains.
  2. There was much discussion during submissions about whether the Agreement was void or voidable, including comments made by me.
  3. It is clear that that is not the question to be determined by the Court. In determining a financial agreement using the term void and voidable is misleading. These are statutory agreements. The role of a court in respect of these agreements is to determine whether the agreements are binding (and therefore enforceable). Section 90G(1B) empowers a court to make declarations as to the binding nature of an agreement. An agreement may be set aside pursuant to s 90K. The use of the terms ‘void and voidable’ are not helpful.
  4. I am satisfied that the 2010 amendments are a valid exercise of the legislative powers of the Federal Parliament and as such are enforceable as part of the Act. 
Rectification

His Honour stated:

  1. Whilst it is perhaps a moot point, senior counsel for the wife argued the question of equitable rectification, which was not argued before the Full Court in Black v. Black (supra).
  2. Senior counsel for the wife argued that in the event that the 2010 amendments were ultra vires the power of the Commonwealth or alternatively in the event that the Agreement was otherwise not binding pursuant to the provisions of the Act that it was open for me to rectify the Agreement pursuant to equitable principles having regard to s 90K.
  3. The factual platform in relation to that was that the parties and their solicitors had intended (and in reality initially prepared) a certificate which complied with the 2004 amendments. The evidence of the wife’s solicitor, which I have accepted, is that he thought he was signing the 2004 certificate not the 2000 certificate. I have made findings in relation to this and also in relation to Mr Samews earlier in these reasons. It was argued by counsel for the wife that the Court had power to do so.
  4. Senior counsel for the husband submitted it was not possible to rectify the certificate, firstly because it was not a document of the parties (it was a document signed by the solicitor) and you cannot rectify a document for a third party.
  5. The rectification was not changing a document between third parties it was simply reflecting what the parties and their solicitors had clearly intended the document to read that is, the 2004 certificate.
  6. Having regard to the facts in this case, had it have been necessary (which it is not) I would have rectified the Agreement, the certificate being part of that Agreement. 
  1. Included in the submission was that the Agreement was obtained under pressure from the wife upon the husband on the basis of a wedding soon after a period of separation and that representations were made as to marriage, children and togetherness which were never fulfilled in the light of the subsequent events.
  2. Before addressing these issues the Court needs to reiterate or set out relevant findings of fact. In doing so the Court must have regard to the circumstances at the time that the agreement was negotiated and entered into. In that respect the Court can have regard to subsequent facts insofar as they establish the state of mind of the parties at and around the time they entered into the agreement.
  3. The parties had been in a bona fide de facto relationship for a period in excess of seven years prior to the date of the Agreement and prior to their marriage.
  4. The parties agreed to marry in late July 2005. The marriage took place in October 2005, days after the parties finalised their financial agreement. The husband asserts that the cohabitation was for a much lesser period on the basis that the parties lived in different houses particularly between 2002 and 2005. The evidence of the parties was that prior to that time they also had some different houses. I prefer the evidence of the wife, that is, that the parties lived together most weekends at M but that the wife travelled to Sydney from time to time to stay with the husband in the W accommodation.
  5. The husband tendered in evidence a schedule showing the respective parties’ telephone records which he asserted was an indication as to the time the parties spent together. I generally accept that record although it has to be seen in the context that the parties had weekends away, may not have always rung each other and had at least one three week holiday overseas.
  6. The wife did spend time at W and to a large extent I accept her evidence that she was the homemaker and housekeeper in that property as well as at M. As I said earlier, in many ways her contributions were greater having regard to the need to maintain and manage two properties instead of one. I have had regard to that in terms of the questions of contribution referred to later.
  7. The husband asserts that the Agreement was an “ink on the tuxedo” type agreement in that he barely had time to reflect upon its terms and the overall consequences. He says that the parties had separated for about three weeks in June/July 2005 and upon their reconciliation the wife requested marriage and later requested a financial agreement. The husband claims that there was fraud, duress and unconscionability.
  8. The husband’s evidence, as I have referred to earlier, is problematic in a number of ways. The husband expressed a desire at least six months and possibly twelve months before their marriage that he wanted a financial agreement. It is significant that the financial agreement includes a notation to that effect.[71]
  9. I am satisfied that it was not the case that the husband was infatuated to the loss of sensibility. Nor was it the case that he was lured into the Agreement by the wife’s use of intimate relations. Even if I had accepted the husband’s evidence that the intimate relations between the parties diminished substantially after their marriage (which I do not), I would not have concluded that that was indicative of fraud, unconscionable conduct or undue influence. It would not seem to be unusual in human behaviour, that intimacy may wax and wane throughout a relationship. The husband may not be the first of his gender to complain that intimacy diminished after marriage. That change, by itself, does not necessarily lead to a conclusion of fraud or unconscionable behaviour on the part of a wife.
  10. The wife was cross examined in relation to intimacy on the parties’ honeymoon after their marriage. Again, I am not satisfied that this is a factual basis for the relief sought for the claims made on behalf of the husband.
  11. There was an issue of fact in relation to the parties not sharing a bedroom and I have dealt with that issue earlier in these reasons.
  12. The husband says that the wife had set her mind to achieving a half interest in the H home. His counsel refers to various parts of the wife’s evidence in support of this. I find that the wife was looking to find financial security in terms of the Agreement. However, I am equally satisfied that the husband had in the previous years needed to pay his first wife in excess of $6 million and was looking to ensure that this second marriage did not create the burden of litigation and unknown outcomes. The husband’s evidence in relation to this part of his claim seems to have arisen in recent times. In that regard, I accept the submissions of senior counsel for the wife. The husband’s main reason for entering into the Agreement, according to the husband, at least at earlier times, was as a consequence of his desire to avoid a court case and similar ‘messy’ property issues as was the case with his first marriage.
  13. In about July 2005 the parties’ relationship was under strain, and I have made findings in that regard in that the wife continued to live in their respective homes and she continued to attend, on some occasions, the W apartment to tidy and clean. I prefer the evidence of the wife on that issue. I am satisfied that once the parties resolved those relationship issues the parties immediately agreed to marry. That is not indicative of fraud, duress and unconscionability. It is simply a normal factor of medium to long term relationships.
  14. Senior counsel for the husband said that the husband and wife had discussed buying a modest home for the wife in the M area. The wife’s evidence was that there was some in passing comment in that regard. I prefer the wife’s evidence in that respect.
  15. The husband asserts that the wife promised to love him and have his children and they did not have children. There are some issues of fact as to what the wife said and what the wife didn’t say. I am satisfied that the parties had discussions about children but I am not satisfied that the discussions about children were such as to be indicative of fraud, duress or unconscionability.
  16. Senior counsel for the husband asserted that the wife set her mind to marry the husband solely for the purpose of obtaining a half interest in the H property, of value of about $3.25 million.
  17. I do not accept that the husband was induced by the wife to enter into the Agreement or the marriage. The husband had wanted a financial agreement and had instructed his legal practitioner to prepare that agreement. He did that because of the events surrounding his property settlement with his former wife. He wanted both the agreement and the marriage, and he was successful in those endeavours.
  18. The husband asserts that the wife set up the arrangements and made false promises of love and a desire for children. The wife’s behaviour was not indicative of fraud, it was indicative of a prudent person seeking legal advice conscious of her own needs. I do not accept that it was a pre-determined attempt to obtain one half of the H property.
  19. Senior counsel for the husband submitted that it was sufficient evidence to make probable the husband’s version. I do not agree.
  20. The Agreement, sensibly, had provisions in it in the event that the marriage was to end in the short to medium term or in the medium to longer term. I am conscious of the evidence of the witnesses supporting the husband’s case. I am not satisfied that that evidence establishes the basis for the equitable relief sought by the husband. Some of the evidence is taken out of context and a number of witnesses are strongly aligned to the husband.
  21. I do not accept the husband’s assertions that the wife’s discussions about children and love were representations which were made in the context of fraud, duress or unconscionable conduct. They were simply the discussions that couples in close relationships have from time to time...

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