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Family Law & Binding Financial Agreement

Submitted by Jamesnoble on Mon, 08/22/2022 - 01:22

The law in regard to Binding Financial Agreement in Brisbane is extensive and complex. The law is governed by the provisions in the Family Law Act 1975 (as amended). Similar provisions are provided in the Act for de-facto relationships.

Because it is a complex area of law it is a requirement (as detailed below) that the parties entering into a Binding Financial Agreement must consult a solicitor and obtain legal advice.

The relevant law is detailed as follows:

LEGISLATIVE PATHWAY

49. Section 71A(1) of the Act provides:-

71A(1) [Matters in financial agreements] This Part does not apply to:

(a) financial matters to which a financial agreement that is binding on the parties to the agreement applies; or

(b) financial resources to which a financial agreement that is binding on the parties to the agreement applies.

50. Accordingly, property and spousal maintenance orders pursuant to s 79 of the Act are not able to be made if the parties enter into a financial agreement that is binding.

51. The consequence is that the Court does not have power to make orders for settlement of property pursuant to s 79 of the Act.

52. Pursuant to the definition of financial agreement in s 4 of the Act, a financial agreement means:

an agreement that is a financial agreement under section 90B, 90C or 90D, but does not include an ante-nuptial or post-nuptial settlement to which section 85A applies.

53. Pursuant to s 4 of the Act, financial matters means:-

(a) in relation to the parties to a marriage – matters with respect to:

(i) the maintenance of one of the parties; or

(ii) the property of those parties or of either of them; or

(iii) the maintenance of children of the marriage; or

54. Part VIIIA of the Act provides for the provisions in respect of financial agreements.

55. Section 90B of the Act relates to financial agreements before marriage and provides:-

90B(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.

90B(2) The matters referred to in paragraph (1)(a) are the following:

(a) how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time and before divorce, is to be dealt with;

(b) the maintenance of either of the spouse parties:

(i) during the marriage; or

(ii) after divorce; or

(iii) both during the marriage and after divorce.

90B(3) A financial agreement made as mentioned in subsection (1) may also contain:

(a) matters incidental or ancillary to those mentioned in subsection (2); and

(b) other matters.

90B(4) …

56. Section 90G(1) of the Act provides for the circumstances when a financial agreement is binding. The present iteration of s 90G(1) provides:-

court proceedings90G(1) [Requirements for binding agreement] 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.

Note: For the manner in which the contents of a financial agreement may be proved, see section 48 of the Evidence Act 1995.

57. Whether a financial agreement is binding is to be considered pursuant to s 90G(1A) and (1B) of the Act which provides:-

90G(1A) [Binding nature of financial agreement] 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.

90G(1B) [Declaration that financial agreement binding] 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.

59. Section 90G was inserted by Schedule 2 of the Family Law Amendment Act 2000 (Cth) and provided:-

(1) A financial agreement is binding on the parties to the agreement if, and only if:-

(a) the agreement is signed by both parties; and

(b) the agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:

(i) the effect of the agreement on the rights of that party;

(ii) whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of the party to make the agreement;

(iii) whether or not, at that time, it was prudent for that party to make the agreement;

(iv) 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; and

(c) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and

(d) the agreement has not been terminated and has not been set aside by a court; and

(e) after the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.

Note: For the manner in which the contents of a financial agreement may be provided, see s 48 of the Evidence Act 1995.

(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.

60. The Federal Justice System Amendment (Efficiency Measures) Act (No. 1) 2009 (Cth) (“amending legislation”) introduced retrospective amendments with application to the provisions of the Act dealing with financial agreements, in particular s 90G.

61. The explanatory memorandum to the amending legislation in support of the amendments states as follows:-

Schedule 5 to the Bill amends binding financial agreement and termination agreement provisions of the Family Law Act 1975 to relax certain technical requirements that must be strictly satisfied for financial agreements and termination agreements to be binding. These amendments will respond to the concerns about the binding financial agreement provisions of the Act that have arisen following the decision of the Full Family Court in Black v Black. The Family Law Council has confirmed that amendments are required to restore confidence in the binding nature of these agreements.[3]

62. Schedule 5 pt 1 item 8 of the amending legislation provides for the retrospective application of the amendments to financial agreements made on or after 27 December 2000. Subitems 8(6) and 8(7) provide as follows:-

(6) For a financial agreement made before the commencement of this item, paragraphs 90G(1)(c) and (ca) of the Family Law Act 1975, as inserted by item 2 of this Schedule, do not apply.

(7) For a financial agreement made before the commencement of this item, paragraph 90G(1A)(b) of the Family Law Act 1975, as inserted by item 4A of this Schedule, does not apply and the following paragraph 90G(1A)(b) of that Act is taken to have been inserted by that item and to apply instead;

(b) paragraph (1)(b) is not satisfied in relation to the agreement; and …

63. The amending legislation provides for further transitional provisions in item 8A applicable to agreements made on or after 14 January 2004 and before the commencement of the amending legislation on 4 January 2010. The following transitional provisions apply:-[4]

(1) Subitems (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 subitem (2) of this item.

64. In Senior & Anderson [2011] FamCAFC 129; (2011) FLC 93-470 Murphy J considered the intended purpose of the amending legislation as follows at 85,730:-

178. It can be seen that, by Item 8(1), amendments made by the Amending Act apply in relation to “[all] financial agreements…made on or after 27 December 2000”. That retrospective application would, on its own, provide a foundation for numerous actions that would seek to “cure” non-compliance with the mandatory requirements of s 90G in respect of all financial agreements made pursuant to the Act. In order to prevent that occurring, the broad retrospective application provided for in Item 8(1) is qualified by the succeeding sub-parts.

65. His Honour then considered that the provisions of item 8A, by reference to the supplementary explanatory memorandum to the amending legislation, were to give effect to “similar purposes”:-

181. The Supplementary Explanatory Memorandum to the Federal Justice System Amendment (Efficiency Measures) Bill (No. 1) 2008 (Cth) circulated by the Attorney General provides:

22. The amendment inserts new item 8A into Part 1 of Schedule 5 to the Bill which will provide for additional circumstances in which a financial and termination agreement made on or after 14 January 2004 and before

66. at 85,732 [189] of the judgment:-

“90G 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;

OR

before signing the agreement, the 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
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
whether or not, at that time, it was prudent for that party to make the agreement; and
whether or not, at that time and in light of such circumstances as were, at that time, reasonably foreseeable, the provisions of the agreement were fair and reasonable.
(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 the italicised text or, in the alternative, stating that the advice referred to in the underlined text in paragraph (b) above, was provided to that party (whether or not the statement is annexed to the agreement)

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