Setting aside a Binding Financial Agreement

In the recent case of Kaimal & Kaimal [2020] FamCA 971 (20 November 2020) a Binding Financial Agreement was set aside, or was declared not binding.


In short this case looked at:

  • whether the wife was provided with legal advice pursuant to s 90G(1)(b)

  • whether it would be unjust and inequitable if the financial agreement was declared not binding on the parties

  • whether the financial agreement should be set aside on the basis of fraud pursuant to s 90K(1)(a)

  • whether the financial agreement is void for uncertainty pursuant to s 90K(1)(b)

  • whether the financial agreement should be set aside on the basis of unconscionable conduct pursuant to s 90K(1)(e)

  • wife not provided with necessary legal advice

  • financial agreement void for uncertainty

  • financial agreement not valid


Background


The pertinent dates are:

  • parties married in 1989 (and cohabited)

  • separated 2016 or 2019 (disputed)

  • 30 July 2018 the BFA was signed

The parties both met with Mr C (husband's solicitor) on 27 July 2018 in relation to the Financial Agreement.


The husband was not present in the office with the wife and Mr B (wife's solicitor) at the meeting on 27 July 2018. However, under cross-examination, the husband conceded that on this occasion he was waiting in a nearby car park outside of Mr B’s office.



The advice


The circumstances around the legal advice are contentious, but the wife's version is as follows -


It was a last-minute appointment I was forced to attend by [the husband]. I was given no prior notice. ..... No one explained what was happening to me. I felt very intimidated and confused. I sat in the office and [the husband’s] lawyer spoke about assets and liabilities. .... [Mr C] then escorted me out of [his] office and walked me down the street to another office.


The husband's version is not different in any crucial aspect, particularly when you consider the admission (above) that he was waiting in a car park outside the solicitor's office - The husband deposes that he attended the meeting with the wife and his solicitor, and he recalls Mr C handing the wife a copy of the draft Financial Agreement. According to the Husband, Mr C informed the wife that she required independent legal advice and that there were a number of family lawyers in the area, after which the wife went by herself to Mr B’s office and he did not attend with her in the meeting with Mr B.


The court noted at paragraph 16 - The requirement for legal advice is an important legislative safeguard. .... Accordingly, the legal advice must be real and meaningful to satisfy s 90G(1)(b).


There were two appointments with the wife's solicitor, though on the solicitor's evidence the first appointment on a Friday only lasted for ten minutes, and she made a further appointment for three days later (the Monday). While the evidence varied (the file note of the solicitor and the solicitor's own evidence varied), it would appear likely that the advice consisted of the solicitor reading the agreement to the wife, and globally telling her that it was binding but without providing any other advice, or taking any instructions from the wife about her circumstances or the relationship.


Additionally, there were errors in the document though this seemed to impact upon the court's finding that there was not sufficient advice, rather than lead to any challenge in relation to whether the Deed was actually an agreement.


The certificate that the solicitor signed stated that he did give advice about the advantages and disadvantages of entering into the agreement, amongst other things, and the file notes of the solicitor also stated that he did this, so no piece of paper could have remedied the issue here.



Void for uncertainty


The Court then went on to consider the wife's other grounds to have the Agreement set aside, and discussed again the errors in the document and this time noted that they would have caused the document to be void for uncertainty, though that was not necessary as they had already found a failure to provide legal advice.


There were a number of inconsistencies in relation to the value of the assets which would have made it difficult to give any advice on a percentage split. The agreement itself is repeated in the judgment if you wanted to read it.


Financial disclosure made clearer


While you know that financial disclosure is important, often it is difficult to get all of the information that you need from a client. This is where our online intake questionnaire and our client portal can help you to get the full picture.


If you want to see our platform in action then you could book yourself in for a free demonstration with our Business Development Manager Shannel Fanous, she used to be a family lawyer and she knows it can be difficult to get some of this information from the clients.


Make an appointment here at a time that suits you and she would love to show you how FamilyProperty can help with this.




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