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This year in the matter of Daily & Daily [2020] FamCA 486 (17 June 2020) the Family Court in Adelaide set aside a Binding Financial Agreement.
Background
The pertinent dates are -
Cohabitation in 1997
Separated 1999
Resume cohabitation 2001
Engaged 2003
BFA dated 21 July 2005
Married September 2005
Child X born 2006
Child Y born 2009
Separated 2018
Divorced 2020
The agreement
The agreement itself had handwritten changes, made by the husband after the wife and her solicitor signed the agreement (and the certificate), and the handwritten changes were later initialled by the wife and her solicitor at some point after the date of the agreement.
The wife’s position was that there had not been any discussions between the parties as to the terms of the document prior to the husband giving it to her. The wife’s position was that despite ongoing discussions with the husband as to their plans to marry, their finances and their mutual intention to start a family, the husband had not previously discussed his requirement that the marriage was conditional on the parties entering a financial agreement. The husband did not challenge the proposition that he made the marriage conditional upon entering into the BFA.
Later in cross-examination the wife did concede that she had been shown a BFA in 2003, or must have been for the information in the schedule of that proposed draft BFA to have been included. The court did find (at paragraph 107) that - The manner in which the agreement was executed and the alterations initialled by each of the parties evinces a clear intention that the parties intended to be bound by its terms and conditions.
So what went wrong?
The wife's argument was that, effectively, she didn't get legal advice. A great deal turned on this issue. The Court noted at paragraph 151 that -
I do not consider that the advice given by Ms S on 15 July 2005 could be considered as general advice only. I consider that the advice was sufficient to satisfy the requirements of s 90G(1) of the Act.
The court also noted that the correctness of the advice was not the point, only that the advice was given, citing Wallace & Stelzer and Anor [2013] FamCAFC 199; (2013) FLC 93-566 said at 87,593 [103].
However in the end this was not enough. The handwritten changes were difficult though, the court notes at paragraph 170 that -
The handwritten amendments go to the heart of the agreement and are fundamental.
This is in circumstances where the Court accepted that the thing being corrected by the handwritten changes needed to be corrected, as it lacked clarity and if it remained there may have been no agreement at all. However the Court found that there was insufficient evidence that advice was provided in relation to the handwritten changes to meet the requirements of the Act, (I note that the handwritten changes were made after the solicitor for the wife signed the certificate). As they were 'fundamental' this was significant, though it isn't clear whether this was in and of itself fatal because the court seemed to mostly focus on something else.
The Court however found (at paragraph 221) that the agreement should not be set aside as it would be unjust or inequitable if the agreement was not binding. The court then went on to consider whether there was a change of circumstances.
Was there a change in circumstances?
I will go back here and note the Court's comment at paragraph 143 when the sufficiency (or otherwise) of the wife's solicitor's advice was discussed -
The wife acknowledges that at the very least, Ms S gave her advice that if there were children of the marriage, the financial agreement entered into by the parties would not be binding. If that advice was given, it was demonstrably wrong.
Interestingly, the Court then went on to find at paragraph 305 that -
I have found that the birth of the children represents a material change in circumstances.
The Court noted that the husband worked full time, earned a high income and therefore had significant superannuation and other investments, while the wife was unable to work full time and unable to put the invest. The parties appeared to maintain fairly separate finances and investments, with the husband able to put more substantial resources into those investments while the parties agreed that the wife would be the primary caregiver. The Court also noted that the wife had few assets, predominantly her superannuation, and that her reasonable expenses exceeded her income. What is interesting is that the husband had been fired and was by this point out of work, his expenses also exceeded his income, and while the wife had been the primary caregiver during the relationship they now had 'shared care' (though the actual split was not discussed).
The Court found, at paragraphs 315 and 316 that -
Accordingly, I am satisfied that the wife’s ability to care for the children cannot be adequately satisfied by reference to the amount that she is likely to receive consequent upon a determination of her entitlement pursuant to the provisions of the financial agreement. It is also a relevant consideration that the parties are not agreed as to the wife’s entitlement, nor is it certain that the provisions of the agreement are capable of clear understanding.
Hardship has been established and I order that the financial agreement be set aside pursuant to s 90K(1)(d) of the Act.
So, in short, the birth of the children did mean that the Financial Agreement was not binding.
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