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B. Binding Financial Agreements Making Agreements Binding Section 90G is a stand alone section which sets out how to make a financial agreement binding.
In January 2010, section 90G was amended in an attempt to reduce technicalities associated with binding financial agreements (BFAs). However, the amendments essentially created new technicalities and challenges. An added layer of complication was the fact that the amendments applied retrospectively. Hence, the current s 90G requirements apply to all BFAs now in force, regardless of when the BFA was made.
A financial agreement is binding if and only if:
1. The financial agreement is signed by all parties;
2. Before signing, each spouse party (but not a third party) is provided with legal advice about their rights and the advantages and disadvantages of entering into the agreement;
3. A statement confirming that the advice was given must be provided to the client and to the other party either before or after the agreement is signed.
The statement need not be annexed to the agreement.
4. The agreement must not be terminated or be set aside by a Court.
Consequences of a Binding Financial Agreement
1. The jurisdiction of the Court is ousted in relation to those matters covered by the agreement (s 71A).
2. The agreement continues to operate after the death of a party to the agreement and is binding on or can be enforced in favour of the legal personal representative of the deceased.
3. The agreement can only be terminated by another BFA or a binding termination agreement.
Difficulties for Practitioners
1. Does legal advice provided to each party before signing a BFA have to be adequate legal advice?
(e) A party does not have a proximate relationship with the other party's lawyer in order to sue should a BFA become non-binding as a result of the lawyer's failure to advise their client properly.
2. What is independent legal advice?
3. Note however: Pursuant to s 90G(1A), a Court may now declare as binding a signed financial agreement which fails the legal advice and lawyer's statement requirement provided that "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)".
C. Terminating a Financial Agreement
A financial agreement may only be terminated by:
1. Entering into another financial agreement (ss 90B(4), 90C(4) and 90D(4));
2. Entering into a termination agreement within the meaning of s 90J(1)(b).
D. Setting Aside a Financial Agreement Even if a financial agreement is 'binding', the Court has discretion to set it aside.
The grounds upon which a BFA may be set aside are set out in s 90K of the Act.
1. The agreement was obtained by fraud (including non-disclosure of a material matter).
2. The agreement was entered for the purpose of defeating a creditor/s or with reckless disregard of the interests of a creditor/s.
3. The agreement was made for the purpose of defrauding or defeating the claim of another person who is a party to a de facto relationship with a spouse party or with reckless disregard of those interests of that other person.
4. The agreement is void, voidable or unenforceable in accordance with ordinary contract law principles.
5. In the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out.
6. Since the making of the agreement, a material change in circumstances has occurred in relation to the care, welfare and development of a child of the marriage, and as a result, the child or the parent as carer will suffer hardship.
7. A party to the agreement engaged in conduct that was unconscionable.
Remedies available to a Court when issues arise about whether a financial agreement is void, voidable or unenforceable are set out in s90KA. See Senior & Anderson above.
BFA's are fraught with technicalities and uncertainties. How the court will apply the law to various fact situations is far from settled.
Practitioners should exercise the greatest care when having their clients enter BFA's to ensure that such agreements will be binding on the parties and not capable of being set aside by a Court.
However, given the challenges described herein, perhaps consent orders in place of BFA's where possible is preferable.
The writer has made reference to the paper of Martin Bartfeld QC dated 8 April 2011 in compiling this section of the paper.
3. SPOUSAL MAINTENANCE: LUMP SUM OR PERIODICThis topic will be dealt with by Ian Mawson SC.
4. CONTINUED ROLE OF THE 'SINGLE EXPERT' IN FINANCIAL CASES
A single expert witness is an expert witness appointed by agreement between the parties or by the court to give evidence or prepare a report on an issue.
Law Relating to Single Experts The law relating to single expert witnesses in the Family Court is set out in Part
15.5 of the Family Law Rules 2004 (Cth).
3. Leveling the playing field where parties have unequal resources.
4. Increasing the prospects of settlement.
Adversarial Experts A party is not permitted to tender a report or adduce evidence from another expert witness, if a single expert has been appointed, without the Court's permission (r 15.49(1)).
Rule 15.49(2) provides three exceptions:
2. If another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue.
3. If there is another special reason for adducing the evidence from another expert witness.
The Court will consider a number of factors in determining whether to allow a party to engage an adversarial expert where a single expert has been appointed.
Conference of Experts Where more than one expert prepares evidence in respect of an issue, the rules allow for a conference of experts and joint statement to be made to the Court.
Trend Away From Single Experts in Complex Financial Cases We are seeing more and more that the use of single expert witnesses in complex financial cases is not having the intended purpose and is resulting in an increased layer of complication and cost, namely due to the frequent use of adversarial experts by one or both parties.