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Sullivan & Sullivan [2011] FamCA 752

Categories: Binding Financial Agreement, Contract, Pre-Nuptial Agreement, Property, Rectification
Tags: , , , , , , , , ,

Judge Name: Young J
Hearing Date:
Decision Date:30/09/2011
Applicant: Mr Sullivan
Respondent: Ms Sullivan
Solicitor for the Applicant: Westminster Lawyers
Counsel for the Applicant: Mr Wilson
Solicitor for the Respondent: Lander & Rogers
Counsel for the Respondent: Mr Dickson
File Number: MLC 11237 of 2010
Legislation Cited: Acts Interpretation Act 1901 (Cth), s 23(b)Family Law Act 1975 (Cth), ss 4, 71A, 90B, 90C, 90D, 90G, 90G(1)(b), 90G(1A)(b), 90G(1A)(c), 90KA, 90KFamily Law Amendment Act 2000 (Cth), s 10Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 (Cth), Items 2, 4, 4A, 8, 8(4), 8(6), 8(7), 8A
Cases Cited: ASIC v Fortescue Metals Group Ltd & Anor (2011) 190 FCR 364; [2011] FCAFC 19, discussedAustralian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424, cited Australian Woollen Mills Pty Ltd v Commonwealth (1955) 93 CLR 546, citedBalzia v Covich [2009] FamCA 1357, discussedBell v Lever Bros Ltd [1932] AC 161, citedC J Bova Pty Ltd v Geoffrey Needham Pty Ltd [2009] NSWSC 1353, discussed

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, appliedEmpirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, citedFevia v Carmel-Fevia (2009) FLC 93-411; [2009] FamCA 816, appliedFinancings Ltd v Stimson [1962] 3 All ER 386, discussedGray v Ellis [1925] StR Qd 209, citedICTA Investments Pty Ltd T/A Jolly Roger & Anor v GE Commercial Corporation (Australia) Pty Ltd & Anor [2006] NSWCA 290, citedMaralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, discussedMasters v Cameron (1954) 91 CLR 353, discussedNeill v Hewens (1953) 89 CLR 1, cited Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146, citedPukallus v Cameron (1982) 180 CLR 447, discussedRaffles v Wichelhaus (1864) 2 H & C 906, citedRuane & Bachmann-Ruane & Anor [2009] FamCA 1101, appliedRyan v Joyce [2011] FMCAfam 225, distinguishedSenior v Anderson (2011) FLC 93-470; [2011] FamCAFC 129, followedSindel v Georgiou (1984) 154 CLR 661, discussedTaylor v Johnson (1983) 181 CLR 422, appliedToll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, applied
Jurisdiction: Family Court of Australia
Parental Responsibility Outcome: Not Relevant
Residential Outcome: Not Relevant


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Orders

IT IS ORDERED:

THAT the “Agreement” dated 16 April 2003 between the Applicant Husband and the Respondent Wife is not a “financial agreement” within the meaning of the sections 4, 71A, 90B, 90C and Part VIIIA of the Family Law Act 1975 (Cth).

THAT the “Agreement” dated 16 April 2003 between the Applicant Husband and the Respondent Wife is unenforceable and not able to be rectified.

THAT the “Agreement” dated 16 April 2003 between the Applicant Husband and the Respondent Wife is not binding pursuant to section 90G of the Family Law Act 1975 (Cth) as amended by the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 (Cth).

THAT the “Agreement” dated 16 April 2003 between the Applicant Husband and the Respondent Wife does not, pursuant to section 71A, preclude the application of Part VIII of the Family Law Act 1975 (Cth).

THAT the Applicant Husband’s Initiating Application filed 6 December 2010 be dismissed.

THAT the Application of the Respondent Wife, in order 3 of the Response to Initiating Application filed 4 May 2010, for a property settlement pursuant to section 79 of the Family Law Act 1975 (Cth), be listed before Young J on Thursday 8 December 2011 at 10.00 a.m. for further directions and case management.

THAT the Applications of the Respondent Wife in the Application in a Case filed 1 June 2011 seeking interim orders associated with section 79 proceedings also be listed before Young J on 8 December 2011.

THAT the Respondent Wife’s Response to Initiating Application filed 4 May 2010, be otherwise dismissed.

THAT the parties file and serve written submissions, addressing the issue of the payment and quantum of costs within seven (7) days (limited to no more than 5 pages).

IT IS CERTIFIED

THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for each of the husband and wife.

IT IS NOTED that publication of this judgment under the pseudonym Sullivan & Sullivan is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

By an Initiating Application, filed 6 December 2010, the husband, as Applicant, sought orders in the following terms:

“1.          That the agreement between the parties dated 16 April 2003 (“the agreement”) be rectified by changing references to section 90B to 90C in Recital K and paragraph 1 of the agreement.

2.           That the agreement be declared a financial agreement pursuant to section 90C of the Family Law Act 1975.

3.           That this matter be listed for hearing with priority as a discrete issue.”

In support of that Application the husband’s affidavit, filed 6 December 2010, annexed a copy of the relevant agreement dated 16 April 2003 (“the Agreement”). Paragraphs 8 to 15 of that affidavit are directly applicable to the validity, enforcement and rectification of the Agreement and state as follows:

“8.          During our relationship, which spanned approximately 19 years, [the wife] and I had several periods of separation both before and after our marriage, during which we lived apart, which cumulatively totalled approximately 4 years.

9.           In or about early 2002 [the wife] and I became engaged to be married. [The wife] and I agreed to enter into a binding financial agreement. We each instructed solicitors to advise us and act for us in relation to the agreement.

10.          On 11 April 2003 [the wife] signed the agreement between us, which is described as an agreement pursuant to section 90B of the [Act].  Her solicitor signed the Certificate of Independent Legal Advice the same day.

11.          On 13 April 2003 we were married.

12.          On 16 April 2003 I signed the agreement between us, and my solicitor signed the Certificate of Independent Legal Advice.

13.          In July 2010 [the wife] and I separated and [the wife] vacated the former matrimonial home.

14.          I have been advised that pursuant to the Act a Financial Agreement entered into during a marriage is an agreement pursuant to section 90C of the Act.  I seek that the agreement be rectified to reflect that it is an agreement pursuant to section 90C, by changing the reference to section “90B” to “90C” in Recital K and paragraph 1 of the agreement.  Additionally I seek a declaration that the agreement is a financial agreement pursuant to section 90C of the Act.

15.          I seek this matter be listed for a hearing with priority as a discrete issue.”

By her Response to the husband’s Initiating Application, filed 4 May 2011, the wife sought an order that the husband’s Application be dismissed.  The wife had earlier filed an affidavit on 5 April 2011 and her evidence therein at paragraphs 13 to 20 deposed to the preparation of, and necessity for, an agreement and the circumstances in which she signed that document. Omitting other factual issues deposed to in that affidavit it read as follows:

“13.         In early April, around 10 days before our wedding, the Husband presented me with a document that he says was a “pre-nuptial agreement”. The husband told me I must immediately sign the document in front of a solicitor. I protested that I did not want to sign a pre-nuptial agreement, but the husband was firm and insisted that I do so. He repeatedly told me that if I did not sign the document then he would not marry me.

.            .  .

16.          In the days after presenting me with the document the husband repeatedly insisted that I sign the document and threatened to cancel the wedding. I saw a local solicitor who told me that he would not sign the solicitor’s certificate attached to the document as he did not consider it to be fair. I was very upset at this point, because although I did not want to sign the document I felt that I simply had no choice. When I told the Husband that my solicitor had refused to sign the document he became angry and reiterated his insistence that the wedding could not go ahead unless I signed it and told me to see another solicitor. He was aggressive and threatening to me. I became even more distressed about the prospects of the cancellation of the wedding in view of the fact that I could not find a solicitor who would sign the requisite certificate. I felt under enormous pressure to abide by the Husband’s demands.

17.          I consulted with another local solicitor on around Wednesday, 9 April 2003. The second solicitor signed the certificate of advice on Friday, 11 April 2003. On that day I also signed the document and gave it to the Husband.

18.          After I gave the signed document to the Husband he made no further mention of the issue and our wedding took place on Sunday, 13 April 2003.

19.          I now understand that the husband signed the document after we were married. Had I known that this was an option I could have been more considered in my approach to the issue of entering into the Agreement free from my concerns about the cancellation of the wedding and further could have followed the legal advice I was given initially.

20.          In the period immediately after I signed the document I did not receive any copy of that document as executed by both myself and the husband, nor am I aware of my then solicitors having been provided a copy of the executed document.”

The wife subsequently filed, in further proceedings, an Application in a Case on 1 July 2011, supported by a further affidavit of that day.  That Application was primarily concerned with further inspection, discovery and production of documents and information, and those issues are not before me in this discrete hearing.

In her affidavit filed 1 June 2011, which I have read, the wife deposed to matters in support of those further injunctive and disclosure orders but again they are not directed to the discrete issue now before me.

The husband filed a further Response to that Application on 9 August 2011 opposing the orders sought by the wife and likewise that Response and the affidavit filed in support thereof are matters relevant to other issues in these proceedings.

BACKGROUND FACTS

The parties commenced living together in a de facto relationship in or about 1991 and they have two children born in 1994 and 2002.

The husband was born in 1971 and the wife was born in 1969.

The parties married on 13 April 2003.

The parties finally separated in July 2010 and have since that date lived separately and apart. The parties during their de facto relationship prior to marriage for a period or periods lived separately and apart, but the duration of those periods on each party’s account is not consistent. However, that is not relevant to the issue currently before the Court.

THE AGREEMENT, THE PARTIES’ SIGNATURES AND THE CERTIFICATES

The Agreement is in evidence before the Court as an annexure to the husband’s affidavit, filed 6 December 2010, and was drawn by the husband’s (then) solicitors, Law Firm 1.

The wife signed the Agreement in the presence of a solicitor from the firm Law Firm 2. The wife obtained legal advice from this solicitor and on the day as she signed the Agreement in his presence on 11 April 2003, he signed the Certificate of Independent Legal Advice annexed to the Agreement.

The husband signed the Agreement in the presence of his solicitor on 16 April 2003, and his solicitor signed the Certificate of Independent Legal Advice also annexed to the Agreement on that day. The front page of the Agreement was dated in handwriting on that day.

In summary, the wife signed the Agreement in the presence of her (then) solicitor, prior to marriage on 11 April 2003, and then the husband executed the Agreement in the presence of his (then) solicitor on 16 April 2003 after the parties were married on 13 April 2003. The Agreement was then dated in handwriting as having been made, after it was signed by the husband on 16 April 2003.

The first schedule to the Agreement records the assets and liabilities of the husband as at 1 April 2003.  The second schedule, which was prepared to record the assets and liabilities of the wife, is blank and records “nil” and that has been initialled by both parties.

The Agreement correctly identified the parties by their name, their (then) residential address and occupations. The Agreement records various recitals and substantive clauses.

The Certificates of each of the (then) solicitors advising the husband and wife in relation to the Agreement were separately signed and dated and annexed to the Agreement. Those documents are entitled:

Certificate of Independent Legal Advice

Section 90G Family Law Act

On the evidence before the Court each of the solicitors signed the respective annexed “Certificate of Independent Legal Advice” (“the Certificate”) relating to the advice given to each spouse party in the presence of their client before their clients each signed the Agreement, as the respective annexed Certificates state:

“I [name of solicitor]… CERTIFY THAT I have advised my client… in relation to the Agreement proposed to be entered into between my Client and [the other spouse party] and prior to the signing of the Agreement by my Client, including advice as to the following matters…”

Each solicitor certified that they had advised their client independent of the other party in relation to the Agreement prior to their client signing the Agreement and that their advice included advice on the following matters as set out in the husband’s solicitor’s certificate (the wife’s solicitor’s certificate numbered the same paragraphs set out below as (e), (f), (g) and (h)):

“(a)         The effect of the proposed Agreement upon the rights of my Client to apply for an Order under the provisions of the Family Law Act 1975 (as amended) and otherwise at law and in equity.

(b)          Whether or not at the time of my advice it was to the advantage of my Client, financially or otherwise to make the Agreement.

(c)          Whether or not at that time, it was prudent for my Client to make the Agreement.

(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.”

Both solicitors, in the identical form of document, each certified that their client:

“Appeared to understand the advice I gave him/her and I believe will be entering into the Agreement freely and voluntarily with full knowledge and understanding of the terms thereof and of the obligations it imposes and the benefits it confers.”

The error in the Agreement that is sought to be rectified by the husband is contained in recital K and clause 1. Recital K refers to the parties entering into a “financial agreement under s 90B of the Act” and clause 1 states that the Agreement “is entered into pursuant to s 90B of the Act”.  .

HEARING AND SUBMISSIONS OF THE PARTIES

The matter came before me in a Judicial Duty List on 11 August 2011 and by consent I ordered that the issues of the validity, rectification and declaration of the Agreement executed in April 2003 be listed before me for hearing and determination. I required counsel for both parties to file a written outline of argument on the legal issues arising on behalf of their clients. Mr Wilson initially filed his outline on 19 August 2011. That outline was updated and amended pursuant to the document provided to me on the morning of the hearing. The amended outline was marked exhibit “H1” and was retained upon the court file. Mr Dickson provided an outline on behalf of the wife on the morning of the hearing and that document was marked exhibit “W1” and was retained upon the court file.

THE APPLICANT HUSBAND’S SUBMISSIONS

Counsel for the applicant husband made submissions, as detailed in his amended outline of 22 August 2011, that the validity of the Agreement made between the husband and wife dated 16 April 2003 was contingent on compliance with the requirements in Part VIIIA and s 90G(1) of the Act. To that end counsel submitted that the application of the Federal Justice System Amendment (Efficiency Measures) Act (No.1) 2009 (Cth), Act No. 122 of 2009, (“the Transitional Act”) pursuant to Item 8(4), as set out in the reasons for judgment of Murphy J in Senior v Anderson (2011) FLC 93-470 at paragraph 177, was necessary to determine if the certificates were compliant.

It was argued that s 90G(1)(b)(i) to (iv) as applicable to the agreement, based on the relevant provisions of the Transitional Act, were complied with and that the facts of the matter before the Court could be distinguished from those in Balzia v Covich [2009] FamCA 1357 where the certificates of advice were found to be erroneous and the agreement therefore not valid or binding.

Specifically in relation to the issue of the certificates and the operation of s 90G, and in reference to the outline of the wife at paragraph 16 (which related to the significance of the time when each party signed the Agreement in relation to the content of the legal advice provided and hence compliance with the requirements of s 90G(1)(b)(i) to (iv)), counsel for the husband contended that the Court should not look behind the certificates if prima facie the certificates complied with the statutory requirements as set out in s 90G. Counsel argued that Balzia v Covich (supra) could be distinguished as the certificates in that decision clearly stated that the advice provided was in relation to a s 90B agreement and in the matter before the Court no section was stated on the certificate other than s 90G.

It was also submitted (in response to paragraph 16 of the wife’s outline) that the advice provided to the wife and husband would not differ if the Agreement was made before or after the marriage and it was argued that clause 9 was directed to post-marriage rights and that recital D made it clear that the Agreement was intended to be conditional on the marriage of the parties. Further, in relation to the relevance of the wife’s rights under the Property Law Act 1958 (Vic) prior to marriage, counsel for the husband contended any advice to the wife would be directed to the effect of the Agreement on or after marriage which would exclude the operation of the Family Law Act 1975 (Cth) and therefore would have been the same irrespective of whether it was received pre-marriage or post-marriage and would not have included advice on the wife’s rights pursuant to the Property Law Act 1958 (Vic).

Counsel relied on the reasoning of Strickland J in paragraph 149 of Senior v Anderson (supra). His Honour, in relation to a ground of appeal that challenged the sufficiency of the evidence on which I found that the references to s 90C in that agreement and the annexed certificates were, “unintended and unknown”, stated that:

“…no such specific evidence was needed if either the plain wording of the document itself was redolent of an error or if there was evidence that the common intention of the parties is clear but is not reflected in the terms of the agreement.”

It was argued that the exercise to be undertaken was to look at the plain wording of the Agreement and annexed certificates and that in the matter before the Court there was no need to look behind those documents as there was an error on the face of the document that did not reflect the clear common intention of the parties to enter into a financial agreement.

It is relevant that counsel for the husband also made submissions as to the application of Item 8A of the Transitional Act and consequentially the relevance of s 90G(1)(c) and (ca) to the validity of the certificates and Agreement. Counsel indicated that the factual dispute as to whether the wife received a signed copy of the certificate of advice given to the husband could be determined at the hearing relating to whether the Agreement, if determined to be valid, could be set aside. Subsequently in reply counsel conceded that s 8(6) of the Transitional Act precludes the operation of s 90G(1)(c) and (ca) to the Agreement in this matter. Counsel for the wife agreed that the relevance of s 90G(1)(c) and (ca) could be determined at the later hearing, if required, but otherwise did not address the point.

It was further submitted for the husband that for the purposes of Part VIIIA of the Act the Agreement between the parties was executed after the husband signed the document on 16 April 2003 following the marriage of the parties on 13 April 2003. It was argued that it was irrelevant that the wife signed the Agreement prior to the marriage on 11 April 2003, as there was no agreement executed at that time because the husband had not then signed the Agreement. Therefore the Agreement, on the husband’s submissions, was executed on 16 April 2003. Counsel for the husband argued that therefore the references to s 90B throughout the Agreement were erroneous but “completely immaterial to the substantive provisions of the agreement” and were able to be rectified and declared valid pursuant to s 90KA of the Act. Counsel relied on the decisions of Senior v Anderson (supra) and Ryan v Joyce [2011] FMCAfam 225. In this respect counsel contended that recital D (that stated the parties intend to marry on 13 April 2003 and that the Agreement was conditional on the marriage taking place) was erroneous and did not impact on the validity of the Agreement.

In the alternative counsel posited that s 90B and 90C were not mutually exclusive and that the Agreement could be a financial agreement under both sections concurrently due to the provisions of s 90B(3) and s 90C(3). In furtherance of this argument counsel submitted that s 23(b) of the Acts Interpretation Act 1901 (Cth) that states “words in the singular number include the plural and words in the plural number include the singular” could be applied to s 90B(1) and s 90C(1) resulting in each section being read in the singular. By this argument it was suggested that the Agreement would be an agreement under s 90B for the wife and an agreement under s 90C for the husband. It was argued that the substantive provisions of the Agreement, including recital D, K and clause 9, which were said to be post-marriage provisions, did not effect the validity of the Agreement and that although the result may be that the Agreement would be a s 90B agreement for the wife and a s 90C agreement for the husband, it would reflect the common intention of the parties to enter into a financial agreement that would operate in the event of the breakdown of their marriage.

THE RESPONDENT WIFE’S SUBMISSIONS

Counsel for the respondent wife provided oral submissions in addition to those set out in his outline of submissions.

In response to the alternative argument posited by the husband, counsel for the wife contended that the husband’s Initiating Application of itself was a concession that the Agreement could not be a s 90B financial agreement. He further submitted that the Agreement could not be a s 90B agreement for the wife and a s 90C agreement for the husband as it is precluded by recital L ( that states no other agreement is in force under section 90B, 90C or 90D) and the subsections of s 90B(1)(b) and s 90C(1)(b) that state an agreement is a financial agreement under that section if “the agreement is expressed to be made under this section”.

Primarily, counsel for the wife submitted that according to contractual principles there was no agreement between the parties at all as there was an offer to enter into an agreement in the terms set out in the Agreement signed by the wife on 11 April 2003, but that the offer was not accepted by the husband prior to the 13 April 2003 resulting in no concluded or executed agreement prior to the marriage of the parties. It was argued that as the husband had not made a counter offer after the parties had married, there was no valid agreement. Reliance was placed on the authority of C J Bova Pty Ltd v Geoffrey Needham Pty Ltd [2009] NSWSC 1353 in relation to the principles of offer and acceptance.

Counsel contended that the issues for determination were whether there is an agreement, and if so is it a financial agreement pursuant to the Act and is it binding on the parties per s 90G.

In relation to the rectification argument relied on by the husband, counsel argued that in Senior v Anderson (supra) there was a mutual mistake as to the section of the Act under which the agreement was to be made allowing for the rectification of the agreement, whereas in the matter before the Court there was no common intention to enter into a s 90C agreement and therefore it could not be rectified. It was stated that it was apparent from the recitals and terms of the Agreement that there was no common intention to enter into a s 90C financial agreement.

It was submitted, per Balzia v Covich (supra) at paragraph 21, that the husband bore the onus of  proof of establishing that the Agreement should be upheld and that the husband had not discharged that burden.

In relation to the certificates and compliance with s 90G(1)(b)(i) to (iv) counsel contended that the advice given to the wife may well have been the same irrespective of whether the agreement was made under s 90B or s 90C but that was not the test for statutory compliance. It was submitted that pursuant to s 90G(1)(b)(ii) to (iv) it was clear that what was required was independent legal advice from a legal practitioner about whether or not “at the time when the advice was provided” the agreement was to the advantage, financially or otherwise, prudent, and in the circumstances fair and reasonable for that party. Counsel contended that therefore the certificates are compliant only if the advice is provided, pursuant to s 90G(1)(b)(i) to (iv), on the agreement at the time the advice is received. It was suggested that this in particular called into question the compliance of any advice given to the husband after the marriage had taken place on 16 April 2003 in view of the certification of the husbands’ solicitor in the annexed certificate.

Counsel for the wife strongly submitted on behalf of his client that the advice given to the wife in relation to the Agreement may or may not have been the same before and after the marriage, but that as at the date the husband signed the Agreement, on 16 April 2003, the parties were married and the wife had, on marriage, acquired rights under the Family Law Act 1975 (Cth). He argued that if presented with the Agreement on 16 April 2003 the wife would have been giving away rights under the Act and this would impact on the advice that was required to be given for the certificate to be valid per s 90G(1)(b)(i) to (iv). It was suggested that even if the Agreement could be rectified to be a s 90C agreement, it would not be a financial agreement under the Act as the wife signed it prior to marriage and was not then a “party to a marriage” per s 90C(1).

In response to my questioning counsel for the wife agreed that the effect of the Agreement was the same under s 90B and s 90C but again contended that the wife did not receive independent legal advice in relation to the Agreement as a s 90C financial agreement and relied on Balzia v Covich (supra) at paragraphs 30 to 32.

Counsel for the wife argued that the decision of Ryan v Joyce [2011] FMCAfam 225 (see paragraph 65) could be distinguished as it was delivered in March 2011 prior to the Full Court decision of Senior v Anderson (supra).

In relation to rectification it was argued that the decision of Taylor v Johnson (1983) 181 CLR 422 was not applicable to the matter before the Court as in that decision the unilateral mistake of the other party was known to the party that sought to enforce the agreement for their own benefit.

PART VIIIA OF THE FAMILY LAW ACT 1975 (CTH)

Part VIIIA of the Act details the provisions applicable to financial agreements and sets out the requirements for an agreement to be deemed a financial agreement made before a marriage, or during a marriage, or after divorce. If an agreement is deemed to be a financial agreement under Part VIIIA, and is binding pursuant to s 90G, then in accordance with s 71A it can operate to oust the jurisdiction of the Court under Part VIII of the Act, to the extent that the financial agreement applies to various financial matters and financial resources of the parties.

Section 71A in Part VIII of the Act relevantly provides that:

“(1)     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.

(2)           Subsection (1) does not apply in relation to proceedings of a kind referred to in paragraph (caa) or (cb) of the definition of matrimonial cause in subsection 4(1).”

There is no definition of “financial resources” in the s 4 definitions to the Act or in Part VIIIA. However, the definition of “financial matters” and paragraphs (caa) and (cb) of the definition of “matrimonial cause” in s 4 state that:

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

(b)           in relation to the parties to a de facto relationship—any or all of the following matters:

(i)       the maintenance of one of the parties;

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

(iii)         the distribution of any other financial resources of the parties or of either of them.

.   .   .

matrimonial cause means:

.    .    .

(caa)   proceedings between:

(i)       a party to a marriage; and

(ii)          the bankruptcy trustee of a bankrupt party to the marriage;

with respect to the maintenance of the first-mentioned party; or

.    .    .

(cb) proceedings between:

(i)       a party to a marriage; and

(ii)          the bankruptcy trustee of a bankrupt party to the marriage;

with respect to any vested bankruptcy property in relation to the   bankrupt party, being proceedings:

(iii)     arising out of the marital relationship; or

(iv)          in relation to concurrent, pending or completed divorce or validity of marriage proceedings between the parties to the marriage; or

(v)           in relation to the divorce of the parties to the marriage, the annulment of the marriage or the legal separation of the parties to the marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104”

Section 4 defines a financial agreement as follows:

financial agreement means an agreement that is a financial agreement under      section 90B, 90C or 90D, but does not include an antenuptial or postnuptial       settlement to which section 85A applies.”

As stated by Strickland J in Senior v Anderson (supra) at paragraphs 88 to 89, Murphy J concurring at paragraph 159, the terms “binding financial agreement” and “agreement” are not defined in the Act. His Honour observed that:

“Despite its wide circulation as a term of convenience, the expression “binding financial agreement” is not defined in the Act. Rather, as can be seen, the Act refers to and defines a particular form of agreement called a “financial agreement”. Further, as s 4 makes plain, a “financial agreement” has two essential components. It must first be “an agreement”, and it must also be an agreement that is made “under section 90B, 90C or 90D.”

“Agreement” is also not defined and thus carries its ordinary and natural meaning. Accordingly, just as with any agreement, principles of law and equity will apply so as to vitiate the agreement if the relevant circumstances are made out. So it is, in my view, with an agreement that purports on its face, to be a “financial agreement”. That interpretation is reinforced by s 90KA, noting that this section refers to “financial agreements” as distinct from “agreements.” (my emphasis)

Section 90B relates to “Financial agreements before marriage” and provides that an agreement that is stated to be made under that section will be a financial agreement:

“(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.

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:

during the marriage; or

after divorce; or

both during the marriage and after divorce.

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.

A financial agreement (the new agreement) made as mentioned in sub-      section may terminate a previous financial agreement (however made)    if all of the parties to the previous agreement are parties to the new    agreement.

Section 90C relates to “Financial agreements during marriage” and provides that an agreement stated to be made under that section will be a financial agreement:

If:

(a)      the parties to a marriage 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 parties to the marriage are not the spouse parties to any other binding         agreement (whether made under this section or section 90B 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 parties to the marriage    may make the financial agreement with one or more other people.

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 during the marriage, is to be dealt with;

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

during the marriage; or

after divorce; or

both during the marriage and after divorce.

(2A)    For the avoidance of doubt, a financial agreement under this section       may be made before or after the marriage has broken down.

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.

(4)          A financial agreement (the new agreement) made as mentioned in subsection (1) may terminate a previous financial agreement (however made) if all of the parties to the previous agreement are parties to the new agreement.

Of relevance is s 90KA in Part VIIIA that provides for the validity, enforceability and effect of financial agreements and states that:

“The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:

(a)           subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and

(b)           has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and

(c)          in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.”

In relation to the application of the principles of law and equity, including rectification, to financial agreements and agreements that purport to be financial agreements under ss 90B, 90C and 90D, Strickland J in Senior v Anderson (supra) at paragraphs 106 to 107 and 110 to 111 (Murphy J concurring at paragraph 159) reasoned that:

“In my view, the “principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts…” (s 90KA) are applicable in deciding whether (a) there is an agreement and (b) the application of s 90B, s 90C and s 90D to that agreement… Specifically I am of the view that the doctrine of rectification can apply, in circumstances when its requirements are made out, to the agreement and to the requirements of s 90B, s 90C and s 90D

It is true that those sections can be said to be central to the question of whether a financial agreement as defined exists. However, that is no bar to the remedy; rectification is available “where the debate is whether a contract exists at all” (R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies, 4th ed 2002 at [26–035] citing Sindel v Georgiou (1984) 154 CLR 661 and Heyward v Planet Projects Pty Ltd [2000] NSW SC 1105).

.   .   .

As previously set out, for there to be a financial agreement there must be an agreement, and to determine that, the principles of law and equity apply, and such an agreement is subject to equitable remedies such as rectification. This is reinforced by s 90KA, but noting again that that section refers to “financial agreements” as to distinct to “agreements”. However, that does not affect the force of the argument.

The relevance of this is that in applying the principles of rectification the intention of the parties is all important, (Pukallus v Cameron (1982) 180 CLR 447 per Brennan J at 456; Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54; Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] 69 NSWLR 603 per Campbell JA at 660), and thus it was quite appropriate for his Honour to have regard to this, but only so far as his Honour was dealing with the mis-description of the section pursuant to which the financial agreement was made (ie s 90C instead or s 90D).”

In the matter before the Court the husband contends that the Agreement is a financial agreement. Conversely, the wife contends there is no agreement existing between the parties as there was no offer and acceptance.

The first page of the Agreement states “THIS AGREEMENT is made…” and clause 1 states that “This agreement is entered into pursuant to s 90B of the Act and forms the totality of the financial agreement between the parties”. It is clear that the Agreement between the parties purports to be a financial agreement under s 90B.

According to the reasoning of Strickland J and Murphy J in Senior v Anderson (supra) the preliminary questions for determination are:

·            Whether the Agreement between the parties purporting to be a financial agreement pursuant to s 90B is an “agreement” according to the principles of contract law and equity in view of 90KA; and

·            Whether the Agreement complies with the requirements of ss 90B and/or 90C of the Act.

Subsequent questions arise in the event that the Agreement does not comply with either ss 90B or 90C of the Act, namely:

·            Can the Agreement be rectified to be a financial agreement? And if so, is it a binding pursuant to s 90G of the Act?

In Senior v Anderson (supra) Strickland J at paragraphs 94 to 96 explained the effect of the provisions of Part VIIIA as follows and discussed the effect of s 90G:

“The Act in effect draws a distinction between agreements which are financial agreements (s 4, s 90B, s 90C, s 90D) and those financial agreements which are binding (s 90G). Financial agreements can, like any other agreement, govern the actions of the parties to them and bind the parties to obligations, but do not oust the jurisdiction of the court. Parties to an agreement that satisfies the definition of “financial agreement” are bound by its terms (or not bound as the case may be), just as they would be bound (or not bound) by any other agreement (s 90KA) (see generally Australian Securities and InvestmentCorporation and Rich & Anor (2003) FLC 93-171).

Section 90G is irrelevant to the contractual rights and remedies of the parties to an agreement that satisfies the definition of “financial agreement”. That section only becomes relevant when the issue is whether an agreement that satisfies the definition of “financial agreement” is effective for a specific statutory purpose, namely to operate as a bar to claims by either party pursuant to Part VIII of the Act (s 71A). It will be so, if and only if, it is “binding” within the meaning of s 90G.

If an agreement, including an agreement that satisfies the definition of “financial agreement” under the Act, fails to effectively bar Part VIII claims (because of its failure to comply with the requirements of s 90G and, as a result, is not “binding” within the meaning of that section) the financial agreement can nevertheless have an affect. However, an agreement’s failure to be “binding” in the s 90G sense renders its use in Part VIII proceedings to be very limited; specifically it does not operate as a bar to orders made under that Part (see e.g. Woodland and Todd (2005) FLC 93-217 at paragraphs 37 – 39).”

Murphy J at paragraph 159 agreed with the reasoning of Strickland J above, however his Honour differed in relation to the application of the Transitional Act to s 90G as it is applicable to various financial agreements made on or after 27 January 2000 and before 4 January 2010 (see the reasons of Murphy J at paragraphs 160 to 161 referring to paragraph 91 of Strickland J’s reasons).

If the Agreement between the parties is an agreement at law, and complies with ss 90B or 90C or can be rectified to be an agreement that is a financial agreement then, pursuant to s 90G, it must be determined whether the financial agreement as rectified is binding per s 90G in order to exclude the operation of the jurisdiction of the Court under Part VIII.

SECTION 90G AS APPLICABLE TO THE AGREEMENT

The provisions of the Transitional Act and Murphy J’s reasons in Senior v Anderson (supra) are particularly relevant to the formulation of s 90G as applicable to the Agreement in the proceedings before the Court (see in particular paragraphs 160 to 161, 163 to 165, 177 to 179, see also Strickland J contra at 91).

Counsel for the wife and the husband both referred to s 90G(1)(b)(i) to (iv) as amended by the provisions of the Transitional Act in accordance with the reasoning of Murphy J in Senior v Anderson (supra). Notwithstanding my decision at first instance in Senior v Anderson [2010] FamCA 601, I now accept and am of the view that the reasoning and approach to the application of the provisions of the Transitional Act to the form of s 90G applicable to financial agreements made on or after 27 December 2000 and before 4 January 2010, as expounded by Murphy J, is correct.

However, it should be noted that Murphy J’s consolidation of s 90G(1) as set out at paragraph 189 to that financial agreement made 27 July 2009 is not the form of s 90G(1) applicable to this Agreement made 16 April 2003.

The provisions of the Transitional Act as applicable to s 90G are set out in Schedule 5 and have retrospective effect. Those provisions explain how s 90G is applicable to a given agreement made on or after 27 December 2000 and up until Schedule 5 came into force on 4 January 2010.

The effect of Schedule 5 of the Transitional Act, as is relevant in the matter before the Court is to, by item 1A insert “Subject to subsection (1A), a” into s 90G(1), by item 2, substitute the (then) s 90G(1)(b) and (c) with s 90(1)(b),(c) and (ca) as set out in that item, by item 4 repeal s 90G(1)(e), and by item 4A insert s 90G(1A), (1B) and (1C).

However, items 8 and 8A guide the application of those various items in Schedule 5 to determine the version of s 90G applicable to a given Agreement based on the date that the agreement was made, if the agreement was made before 4 January 2010 and on or after 27 December 2000.

Sub-item 8(1) of the Transitional Act states that items 1A to 7A apply in relation to financial agreements made on or after 27 December 2000, unless sub-items 8(2) or 8(3) are applicable. As sub-items 8(2) and 8(3) are not applicable items 1A to 7A apply to the Agreement before the Court made on 16 April 2003.

Sub-items 8(4), 8(6) and 8(7) provide that:

“(4)          For a financial agreement made before 14 January 2004, paragraph 90G(1)(b) of the Family Law Act 1975, as inserted by item 2 of this Schedule, does not apply and the following paragraph 90G(1)(b) of that Act is taken to have been inserted by that item and to apply instead:

(b)           before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about:

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

(ii)          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

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

(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

(6)           For a financial agreement made before the commencement of this item [before 4 January 2010], 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 [before 4 January 2010], 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”

Sub-items 8(5), 8(8) and 8(9) apply only to termination agreements and have no application to s 90G as applicable to the Agreement dated 16 April 2003 before the Court.

Item 8A only applies to agreements made on or after 14 January 2004 and before the commencement of the Schedule 5 of the Transitional Act on 4 January 2010 and therefore has no application to s 90G in the matter before the Court.

In relation to the submissions of counsel outlined above at paragraph 29 as to the application of s 90G(1)(c) and (ca) in the matter before the Court, it is clear from sub-item 8(6) of the Transitional Act, in circumstances where item 8A has no application to the Agreement, that subsections (c) and (ca) do not form part of s 90G(1) as applicable to an agreement dated 16 April 2003.

The practical effect of the application of the Transitional Act, as it applies to the Agreement dated 16 April 2003, to s 90G is to take the current form of s 90G and:

·            Delete s 90G(1)(b) as inserted by item 2 and substitute s 90(1)(b)(i) to (iv) set out in item 8(4); and

·            Delete s 90G(1)(c) and (ca) as inserted by item 2 per item 8(6); and

·            Delete s 90G(1A)(b) as inserted by item 4A and substitute s 90G(1A)(b) set out in item 8(7).

On applying the provisions of the Transitional Act to s 90G as applicable to the Agreement dated 16 April 2003 the result is as follows:

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:

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

(ii)          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

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

(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

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

(1A)   A financial agreement is binding on the parties to the agreement if:

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

(b)           paragraph (1)(b) is 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.

(1B)          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.

(1C)          To avoid doubt, section 90KA applies in relation to the enforcement application.”

In the event the Court finds that there is an agreement at law that is a financial agreement pursuant to the relevant sections of the Act, the above form of s 90G is to be applied to determine whether the financial agreement is binding.

IS THERE AN AGREEMENT BETWEEN THE PARTIES?

Although the parties did not direct significant attention in their oral or written submissions to whether there was an agreement between the parties, in my view, based on the decision in Senior v Anderson (supra) the primary question to be addressed is whether there is an “agreement” between the parties according to contractual principles.

At the hearing on 22 August 2011 both parties sought to rely on the various documents filed and did not submit any further evidence before the Court.

The husband in his affidavit, filed 6 December 2010, deposed in paragraphs 9 to 12 that the wife signed the Agreement on 11 April 2003, that her solicitor signed the certificate of independent legal advice on 11 April 2003, that on 13 April 2003 the parties were married, and that on 16 April 2003 after the marriage the husband signed the agreement and his solicitor signed the certificate of independent legal advice.

The wife in her affidavit, filed 5 April 2011, deposed in paragraphs 13 to 19 that the husband presented the Agreement to the wife about ten days prior to the couple’s wedding on 13 April 2003 as a “pre-nuptial agreement”, that she consulted a solicitor who would not sign the certificate of advice as he did not consider the Agreement to be fair, that she then consulted a second solicitor who signed the certificate of independent legal advice on 11 April 2003, the same day that the wife signed the Agreement. The wife deposes that she then gave the signed Agreement to the husband on 11 April 2003.

Counsel for the husband contended that the Agreement was executed by the husband’s signature on 16 April 2003 and thereafter became binding on the parties.

In contrast counsel for the wife submitted that there was no valid agreement between the parties pursuant to contractual principles as there was no offer or acceptance. More particularly counsel for the wife submitted that the husband never accepted the wife’s offer. It was argued by counsel for the wife (as recorded in the transcript) that:

“…the effect of what happened here was that the Wife made an offer by executing the Agreement she did on 11 April… she made an offer to enter into the Agreement on those terms… as a “prenuptial agreement”…in contemplation of the marriage as is made clear from the terms of the Agreement, the recitals to the Agreement… and that offer was not accepted prior to the marriage…”

Counsel for the wife contended that as no counter offer was made by the husband to the wife after the marriage there was no agreement on the terms as set out in the offer made by the wife on 11 April 2003.

RELEVANT CONTRACTUAL PRINCIPLES

Under the Act to be a financial agreement an agreement must be a written agreement (see s 90B(1)(a), s 90C(1)(a) and s 90D(1)(a)) and to be binding it must comply with the relevant form of s 90G applicable to the agreement which includes the requirement that the agreement be signed by all parties (see above s 90G(1)(a) at paragraph 71).

An agreement may be oral, written, partly written and partly oral or implied by conduct. The requirement for an agreement to be in writing will apply where the parties agree that the agreement is to be in writing or where a written agreement is required by statute (see Neill v Hewens (1953) 89 CLR 1 at 13 and Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 at 158). In such circumstances an agreement that is partly written and partly oral may exist but it will be unenforceable (see Gray v Ellis [1925] StR Qd 209). If the Agreement between the parties is partly oral and partly written, it may still constitute an agreement at common law, but it will be unenforceable.

In ASIC v Fortescue Metals Group Ltd & Anor (2011) 190 FCR 364 Keane CJ, Emmett and Finkelstein JJ agreeing, in relation to framework agreements between Fortescue Metals Group and Chinese companies for the construction of a mine, port and railway connection said by Fortescue to be binding, stated at paragraph 122 that:

“It is well-established that the courts strive to uphold bargains: Hillas & Co Ltd v Arcos Ltd (No 2) (1932) 147 LT 503. To that end, the courts will construe the terms of an agreement with an inclination to give effect to the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, esp at [6]-[8]. Further, the courts may, where circumstances permit, apply objective standards of reasonableness to prevent the intention of the parties being defeated…”

Although that decision occurred in the context of a commercial contract, the above principles of construction and objective approach to the intentions of the parties were clearly stated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 where the majority stated:

“This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.” (footnotes omitted)

The determination of whether there was an agreement between the parties in the matter before the Court turns on whether there was offer and acceptance.

An offer is made when one party expresses a willingness to contract on stated terms with an intention to be bound by those terms on acceptance of the offer (see Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 at 457 affirmed in Australian Woollen Mills Pty Ltd v Commonwealth (1955) 93 CLR 546). However, in circumstances where a communication is made inviting the other party to negotiate, or to make an offer, it will constitute an invitation to treat.

Chitty on Contracts: Volume 1 General Principles, (30th Ed, 2008) at paragraph 2-009, states that an invitation to treat is distinguishable from an offer and is clearly not an offer “if it expressly provides that the person who makes it is not to be bound merely by the other party’s notification of assent but only when he himself has signed the document in which the statement is contained”.

In the decision of Financings Ltd v Stimson [1962] 3 All ER 386 Denning LJ, Donovan and Pearson LLJ concurring, found that there was no agreement between the parties. In that case a purchaser signed a hire purchase agreement for a motor vehicle in early March 1961. A clause in the agreement provided that when the form was signed by the purchaser it would become binding “upon acceptance by signature” of an officer of the finance company. An officer of the finance company did not sign the agreement until late March 1961 and in the intervening period the purchaser returned the vehicle due to dissatisfaction with its condition and performance and the vehicle was subsequently stolen resulting in damage. His Honour held that the purchaser’s signature on the hire purchase agreement form was “…in law not an agreement, but only an offer by [the purchaser] to enter into a hire purchase agreement with a… Finance Company.”

It was argued by counsel for the husband on behalf of his client that “[w]hen the wife signed there was no agreement… because both parties had not signed” and that “until the Husband (being the last person to sign) signed the document there was no agreement”. I agree. In my view it is clear that the husband intended to enter into a financial agreement with the wife that he intended to be binding but in handing the Agreement unsigned to the wife prior to the marriage he was making an invitation to treat and not an offer.

The husband stated in paragraph 9 of his affidavit that “[the wife] and I agreed to enter into a binding financial agreement”. This is consistent with the wife’s evidence of the husband’s conduct when he presented her with a document, a “pre-nuptial agreement”, and told her that she must sign in front of a solicitor if she wanted him to marry her. Again on the wife’s evidence after the first solicitor would not sign the certificate and she told the husband of this, the wife deposed that the husband was insistent, told the wife to go to another solicitor and reiterated that “the wedding could not go ahead unless [the wife] signed [the Agreement]”.

More significantly, in addition to the evidence of the conduct of the parties, page 6 of the Agreement provided for the husband to sign the agreement and for his signature to be witnessed, yet he did not do so prior to handing the Agreement to the wife on 11 April 2003. At page 6 the Agreement set out:

SIGNED, SEALED AND DELIVERED   )

by the said [HUSBAND]      )

in the presence of:”

Additionally, the certificate set out on page 9 of the Agreement was typed (when compared to the wife’s solicitor’s certificate that was in hand writing) and stated:

“I, [NAME OF THE HUSBAND’S SOLICITOR], solicitor of the firm of [Law Firm 1], CERTIFY THAT…”

That certificate was also not signed and dated by the husband’s solicitor before the Agreement was handed to the wife on 11 April 2003.

It is apparent that the husband’s intention was for the Agreement to be a binding financial agreement as the Agreement was written (ss 90B(1)(a) and 90C(1)(a)) and made provision for it to be “signed by all parties” (per s 90G(1)(a)) with certificates annexed evidencing the independent legal advice provided to each spouse party prior to signing the Agreement (per s 90G(1)(b) and (c) as in force in April 2003, see s 10 of the Family Law Amendment Act 2000 (Cth), Act No. 143 of 2000).

However, on any view the husband could not be bound by the wife’s assent when she signed the Agreement on 11 April 2003 and therefore the husband’s statement to the wife when he handed her the Agreement prior to that date was not an offer but an invitation to treat.

Consequently, the offer was made by the wife when she handed the signed Agreement, with the annexed certificate signed by her solicitor, to the husband on 11 April 2003. The terms of the wife’s offer were set out in that Agreement signed by the wife on 11 April 2003 but at that time there was no agreement between the parties.

The question that arises is whether the husband accepted the wife’s offer.

Acceptance of an offer is assessed objectively and occurs when the other party unequivocally accepts the terms of the offer (see Taylor v Johnson (1983) 151 CLR 422 at 428 to 429).

Counsel for the wife argued that the recitals and terms of the Agreement made it clear that the Agreement was a pre-nuptial agreement to be entered into prior to marriage and the decision of C J Bova Pty Ltd v Geoffrey Needham Pty Ltd (supra) was relied on by the wife in relation to offer and acceptance.

In that decision Forster J, of the New South Wales Supreme Court, at paragraph 21 stated that:

“…it is trite law that an offer and its acceptance must precisely correspond in the sense that the offeree must have accepted all the terms of the offer and must not have added anything more. Any departure from the terms of the offer deprives a purported acceptance of validity as an acceptance. Rather, it may amount to a new offer, usually described as a counter offer, which is then open to acceptance by the original offeror.”

In the decision of C J Bova Pty Ltd correspondence went between the two parties in relation to litigation regarding a lease. In the correspondence between the parties, offers and counter offers to settle were made, with the defendant accepting one of the plaintiff’s subsequent counter offers “subject to confirmation” of various matters. At the hearing before Forster J the plaintiff contended that the defendant’s acceptance “subject to confirmation” was not acceptance and that the offer had expired and lapsed. The defendant contended that an agreement had been reached. The Court held that the acceptance by the defendant was not unequivocal and therefore constituted a counter offer capable of acceptance.

That decision differs in a number of significant respects from the matter before the Court. The parties in that decision corresponded extensively with a number of offers and counter offers made in the course of attempting to settle litigation and, in the terms of the offer that the defendant’s argued was accepted, there was a clearly stipulated date and time for acceptance of the offer. The time for acceptance was not inferred or implied, it was clearly stated in writing in the correspondence between the parties (see C J Bova Pty Ltd at paragraph 16). Comparatively, on the terms of the offer made by the wife contained in the Agreement there was no specific time or method stated for acceptance by the husband.

Recitals D and K and clause 1 of the Agreement are particularly relevant to the time for acceptance of the wife’s offer and are as follows:

“D.           [The husband] and [wife] intend to marry on 13 April 2003 and this agreement is conditional on the marriage taking place on that date or thereabouts.

.   .   .

K.           The parties desire, insofar as is possible, to contract out of the provision of Part VIII of the Family Law Act 1975 (Cth) (“the Act”) if the marriage breaks down irretrievably and to enter into a financial agreement under s 90B of the Act providing how:

·            in the event of the breakdown of the marriage, their property and financial resources at the date of this agreement, or at a later time, and before the dissolution of the marriage, is to be dealt with; and/or

·            the maintenance of either of them during their marriage and/or after dissolution of marriage is to be dealt with.

.   .   .

1.           This agreement is entered into pursuant to section 90B of the Act and forms the totality of the financial agreement between the parties. It supersedes all prior agreements (written or oral), if any, concerning the financial entitlements and/or obligations of the parties on to the other.”

In Ruane & Bachmann-Ruane & Anor [2009] FamCA 1101 Cronin J discussed the distinction between the recitals and operative clauses of an agreement and cited Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. Cronin J stated at paragraph 62 in Ruane & Bachmann Ruane (supra) that:

“…Mason J (at page 463) said that evidence of surrounding circumstances was admissible to assist in the interpretation of the contract if the language was ambiguous or susceptible of more than one meaning but not where the language was plain. His Honour said that “generally speaking”, facts existing when the contract was made could not be used as an aid to construction of the contract unless they were known to both parties. Brennan J (at page 485) tightened the test and said that the meaning of a written contract could be “illuminated” by evidence of facts to which the written document referred because the language conveyed meaning according to the circumstances in which they were used. His Honour said that the necessity for a term to be implied had to appear from and in, the express terms of the contract not from the extrinsic circumstances.”

At paragraph 65 Cronin J concluded in relation to financial agreements and the significance of recital and operative provisions in Ruane & Bachmann Ruane (supra) that:

“Thus, if it is clear that the parties intended the document to be a financial agreement then the necessary statutory references required to make it binding can be set out in recital clauses. As a matter of precaution, the operative clauses should make clear that reliance is placed upon the recitals. However, even if the incorporation by reference is not made, a court can still read into the financial agreement, the reliance upon the recitals. The only time that could not occur would be if there was an obvious inconsistency between a recital clause and an operative clause. Such an inconsistency however would have to go towards a failure to incorporate one of the statutory requirements. What the parties also need to do is show that based upon satisfying all of the requirements of the Act, the operative part of the agreement deals with the division of property (and if necessary, spousal maintenance) and that there is an intention to oust the jurisdiction.” (His Honour’s emphasis)

In the matter before the Court the language contained within operative provisions and the recitals of the Agreement, and hence the offer made to the husband by the wife on 11 April 2003, should properly be read to support that it was a pre-nuptial agreement to be accepted prior to the marriage of the parties.

Clause 1 states that a term of the Agreement was that it was to be entered into under s 90B and that the Agreement “forms the totality of the financial agreement between the parties” and supersedes all prior agreements. Clause 1 is supported by recital K which states that the parties intended to enter into a “financial agreement under s 90B” and contract out of Part VIII of the Act.

Recital D stated that it was the intention of the parties to marry on 13 April 2003 and that the validity of the Agreement was conditional on the marriage taking place. That recital makes clear that if the marriage did not take place there would be no agreement. Recital D is not inconsistent with clause 1 or recital K, but it does make apparent that the Agreement was conditional on the marriage occurring as opposed to conditional on acceptance by the husband prior to the marriage taking place.

Clause 1, recitals K and D do not state a time for acceptance, however, it is, in my view, apparent that for the agreement to be a financial agreement under s 90B, and for the husband to accept the wife’s offer on the terms on which it was made in order for the Agreement to be binding, acceptance by the husband was required by signing the Agreement, and having the annexed certificate signed by his solicitor, before the parties’ marriage on 13 April 2003. Even if the husband had signed the Agreement, and his solicitor had signed the certificate on 13 April 2003 prior to the marriage of the parties, on the evidence before the Court, acceptance of the wife’s offer was not communicated by the husband to the wife (see ICTA Investments Pty Ltd T/A Jolly Roger & Anor v GE Commercial Corporation (Australia) Pty Ltd & Anor [2006] NSWCA 290).

The wife in her affidavit at paragraph 20 deposed that “[i]n the period immediately after I signed the document I did not receive any copy of that document as executed by both myself and the Husband, nor am I aware of my then solicitors having been provided copy (sic) of the executed document”.

The husband in his affidavit does not state whether the Agreement signed by him, with the certificate signed by his solicitor, was provided to the wife, whether by him or his solicitor on 13 April 2003 prior to the marriage occurring. Further, in the submissions at the hearing counsel for the husband did not contradict or take issue with the contents of paragraph 20 of the wife’s affidavit.

Accordingly, on the evidence before the Court, I find that there was no communication of acceptance by the husband to the wife in the form of the executed document signed by the husband, with the annexed certificate signed by the husband’s solicitor prior to the marriage of the parties on 13 April 2003 (or for that matter within a reasonable time after the husband signed the Agreement on 16 April 2003).

In Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 534 McHugh JA (as his Honour then was) stated that:

“The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that acceptance of the offer should be communicated to the offeror. After a reasonable period has elapsed, silence is seen as a rejection and not an acceptance of the offer. Nevertheless, communication of acceptance is not always necessary. The offeror will be bound if he dispenses with the need to communicate the acceptance of his offer: Carlill v CarbolicSmoke Ball Co [1893] 1 QB 256 at 269.”

In terms of acceptance by conduct, even if the husband could be said to have accepted the wife’s offer contained within the Agreement signed by her, by proceeding with the marriage on 13 April 2003, the concluded agreement would be partly written and partly oral, and therefore unenforceable pursuant to ss 90B, 90C and 90D and s 90G(1)(a) of Part VIIIA of the Act. However, in my opinion no term in the wife’s offer to the husband, constituted by the written Agreement of 11 April 2003 and signed by her, would allow for acceptance by conduct. I conclude that the wife did not dispense with the need to communicate acceptance and this is reinforced by clause 1 of the Agreement that states that the agreement “forms the totality of the financial agreement between the parties”.

In Masters v Cameron (1954) 91 CLR 353 at 360 to 362 the High Court stated that:

“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

.  .  .

Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: Governor & c. of the Poor of Kingston-upon-Hull v Petch (1854) 10 Exch 610; 156 ER 583…

.  .  .

The question depends upon the intention disclosed by the language the parties have employed, and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape: Farmer v Honan (1919) 26 CLR 183.”

The Agreement before the Court falls into the third category and, on the terms of the offer made by the wife on 11 April 2003, the agreement was not intended to have binding effect until signed and executed by the husband, with the annexed certificate signed by the husband’s solicitor.

In the decision of Fevia v Carmel-Fevia (2009) FLC 93-411 the parties entered into a s 90B financial agreement in contemplation of marriage and each party signed the document, and their respective solicitors signed the annexed certificates. Issues later arose as to whether the husband and wife signed the same agreement as the husband and his solicitor contended the agreement included an 18 page annexure when he signed the document, and the wife and her solicitor contended it did not. At paragraphs 304 to 305 Murphy J concluded that:

“The parties do not have a valid, effective and enforceable “financial agreement”.  The husband signed a document materially different to that signed by the wife. The wife never agreed to the husband’s terms which were materially different to those proposed by her in the signed document forwarded to the husband.

The wife did not receive a copy of the husband’s document until many years after the respective documents were signed by the parties. [The husband’s solicitor] did not deliver a copy of (the husband’s) signed document as she swears that she did. The wife did not become aware of the husband’s (materially different) document until, most likely, she saw it appended to documentation filed by him in these proceedings.”

Murphy J held that there was no financial agreement between the parties as the wife did not receive a copy of the husband’s document until many years after the documents were signed by the parties, and that the agreement was not valid, effective or enforceable as the husband signed a document that was materially different to that signed by the wife. Consequentially, Murphy J held that there could not be an agreement between the parties within the meaning of s 90B of the Act (see Fevia v Carmel-Fevia (supra) at paragraphs [161] to [164] and [304] to [305])

In the matter before the Court the husband did not accept the wife’s offer prior to the marriage on 13 April 2003. Even after signing the Agreement on 16 April 2003 the husband did not communicate acceptance of the offer to the wife within a reasonable time, as on the evidence before the Court he did not provide her with an executed copy of the Agreement. It follows that as there was no acceptance of the wife’s offer by the husband prior to the marriage of the parties, and no communication of acceptance on 13 April 2003, or after 16 April 2003 within a reasonable time by the husband, that there is no agreement in existence between the parties.

ARE SECTIONS 90B AND 90C APPLICABLE TO THE AGREEMENT?

As I have concluded that there is no agreement existing between the parties it is not necessary to determine whether ss 90B and 90C are applicable to the Agreement. However, I would make the following observations in relation to the submissions of the parties.

I do not agree with the submission of the husband set out at paragraph 31 that the Agreement can be concurrently a financial agreement under s 90B for the wife and s 90C for the husband. The provisions of s 90B(1) and s 90C(1) clearly state that a financial agreement under each section will be a financial agreement if it is expressed to be made under that section (per s 90B(1)(b) and s 90C(1)(b)) and it fulfils the requirements of the other two subsections (ss 90B(1)(a), (aa) and s 90C(1)(a), (aa)). The application of s 23(b) of the Acts Interpretation Act 1901 (Cth) to read the provisions of s 90B(1) and s 90C(1) in the singular, in my opinion, does not alter that conclusion.

The Agreement dated 16 April 2003 is not a financial agreement under s 90B entered into by “people who are contemplating marriage” per s 90B(1)(a) as the husband was a party to a marriage on 16 April 2003 when he signed the Agreement and could not then have been a person contemplating marriage, given that the parties had married three days prior on 13 April 2003. Conversely, the Agreement is not a financial agreement under s 90C entered into by “parties to a marriage” per s 90C(1)(a) as when the wife signed the Agreement on 11 April 2003 she was not married to the husband and could not then have been a party to a marriage as the parties were married on 13 April 2003, three days later.

Further, in accordance with the reasoning of Murphy J in Fevia v Carmel-Fevia (supra), the Agreement could not be a “financial agreement” under s 90C of the Act as the agreement signed by the wife would constitute a materially different agreement to that signed by the husband.

In my view the s 4 definition of a “financial agreement” is clear and unambiguous, a financial agreement is an “agreement” made under (and that complies with the subsections of) section 90B or 90C or 90D of the Act. Even if there was a valid and enforceable agreement existing between the parties executed by the husband on 16 April 2003, as it stands it could not be financial agreement pursuant to the provisions of Part VIIIA of the Act.

THE AGREEMENT AND RECTIFICATION

In relation to the doctrine of rectification and the operation of ss 90B, 90C and 90D Strickland J in Senior v Anderson (supra) stated at paragraph 107 (Murphy J concurring at paragraph 159) that:

“It is true that those sections [s 90B, 90C and 90D] can be said to be central to the question of whether a financial agreement as defined exists. However, that is no bar to the remedy; rectification is available “where the debate is whether a contract exists at all” (R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies, 4th ed. 2002 at [26-035] citing Sindel v Georgiou (1984) 154 CLR 661 and Heyward v Planet Projects Pty Ltd [2000] NSWSC 1105).”

In Sindel v Georgiou (1984) 154 CLR 661 (as applied by Simos J in Hayward v Planet Projects Pty Ltd  [2000] NSWSC 1105) the High Court stated at 667 that:

“Rectification is a remedy which cures erroneous expression of the parties’ true intention in a contract which is already binding. It is not a remedy which brings a contract into existence in a situation in which the parties have not by their own acts arrived at a concluded contract.”

In relation to rectification where there is a common mistake between the parties, in Maralinga Pty Ltd v  Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350, Mason J stated that:

“What is of importance is that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately. And there has been a firm insistence on the requirement that the mistake as to the writing must be common to the parties and not merely unilateral, except in cases of a special class to which I shall later refer.

It is now settled that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification. It may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties, but does not reflect their common intention (Shipley Urban District Council v. Bradford Corporation; Slee v Warke)…

.   .   .

…in order to succeed the appellant must show that the parties intended by the writing to give effect to the whole of the antecedent agreement and that by common mistake it failed to do so. In Craddock Bros v Hunt, speaking of the jurisdiction to grant relief when the written instrument is preceded by a verbal agreement, Warrington LJ said:

“The conditions to its exercise are that there must be an antecedent contract and the common intention of embodying or giving effect to the whole of that contract by the writing, and there must be clear evidence that the document by common mistake failed to embody such contract and either contained provisions not agreed upon or omitted something that was agreed upon, or otherwise departed from its terms.”

It may be asked why should a plaintiff be required to establish more than disconformity between the antecedent agreement and the written instrument. Why should he be called upon to show that the writing was intended to give effect to the whole of the oral contract and that by common mistake the written instrument failed to do so? The answer lies in the circumstance that the court must be satisfied that the instrument does not reflect the true agreement of the parties. It cannot be so satisfied unless the writing was intended to record the earlier agreement and by the mistake of the parties it fails to do so. If the plaintiff fails to establish these elements he does not displace the hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties.”

In Pukallus v Cameron (1982) 180 CLR 447 at 456 Brennan J stated that:

“Although the remedy of rectification is no longer held to depend upon proof of an antecedent concluded contract, it is necessary to show a concurrent intention of the parties, existing at the time when the written contract is executed, as to a term which would have been embodied in the contract if the parties had not made a mistake in expressing their intention. Proof of such an intention is necessary to “displace the hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties”.

In that decision Wilson J at 452 stated in relation to the proof required to displace a written agreement that:

“The second principle governing the rectification of a contract which is material to this case is that which requires the plaintiff to advance “convincing proof” that the written contract does not embody the final intention of the parties. The omitted ingredient must be capable of such proof in clear and precise terms. The Court must not assume for itself the task of making the contract for the parties.”

At law a common mistake refers to a situation in which both parties are labouring under the same misapprehension, but there is otherwise consensus between the parties (see Bell v Lever Bros [1932] AC 161). A mutual mistake refers to a situation in which each party is mistaken as to the terms of the agreement intended by the other party, but the parties are at cross purposes, their misapprehension differs and as a result there is no consensus between the parties (see Raffles v Wichelhaus (1864) 2 H & C 906). A unilateral mistake occurs when only one of the parties is mistaken as to the terms of the agreement (see Taylor v Johnson (1983) 151 CLR 422).

In circumstances where a party contends that there is a common mistake, as the husband does in this matter, rectification is available when it can be shown that  there is a concluded agreement or in the alternative a common intention that continued unaltered until the execution of an agreement, and the agreement does not express the parties true common intention. However, the onus is on the husband to establish that, the Agreement signed by him on 16 April 2003 that refers to s 90B in clause 1 and recitals K, L and inferentially D, does not reflect the true intention of the parties, and he must provide clear proof that the parties intended to enter into a financial agreement under s 90C of the Act, not s 90B.

Counsel for the husband argued that the references throughout the Agreement to s 90B were erroneous but immaterial to the substantive provisions of the Agreement and that the Agreement could be rectified by changing those references to s 90C thus rendering the agreement a financial agreement under s 90C that could be declared valid pursuant to s 90KA. It was argued that recital D was erroneous in a “temporal sense” as by 13 April 2003 the intention of the parties to marry had been fulfilled and the recital was otherwise immaterial to the substantive provisions of the agreement.

I am not persuaded by the argument put by counsel for the husband as the clear terms of the written Agreement by its recitals and operative clauses indicated that the agreement was intended to be a financial agreement under s 90B entered into prior to marriage. On the evidence provided by the husband in his affidavit, that I find to be curiously lacking in detail in relation to the formation and execution of the Agreement, the husband has not discharged the onus or established that the Agreement, as contained in the offer of the wife made 11 April 2003, did not reflect the true intention of the parties to enter into an agreement under s 90B. I do agree with the submission that the references to s 90B in clause 1, recital K, or the inferences to the Agreement being an agreement entered into prior to marriage and forming the totality of, and only, agreement between the parties in clause 1, and recitals D and L are erroneous or immaterial to the substantive provisions of the agreement.

In relation to the reliance placed Senior v Anderson (supra), in that decision the agreement between the parties erroneously referred to s 90C throughout and the agreement itself was headed as a “Section 90C Financial Agreement”. The agreement was signed by both parties after they were divorced and at first instance I made orders that the agreement be rectified to correct the erroneous references to s 90C to read s 90D as was consistent with the common intention of the parties. Strickland and Murphy JJ reasoned at paragraph 106 that rectification was available in those circumstances to correct the erroneous references to s 90C in the agreement to refer to s 90D and the majority agreed that the power to rectify arose from equity rather than the Act (see paragraphs 132 to 133). However, as submitted by counsel for the wife, in that decision there was common mistake between the parties as to which section the agreement was to be made under in order to be a financial agreement pursuant to s 90D, Part VIIIA and s 4 of the Act. Consequently, there was a common intention to enter into a financial agreement under s 90D that allowed for the rectification of the agreement in that matter.

That decision differs in three significant respects to the matter before the Court, first there was an agreement pursuant to contractual principles that was executed by the parties, second, there was a common intention to enter into a s 90D financial agreement and thirdly, there was a common mistake as to the section of the Act under which the financial agreement was to be made.

The other decision relied on by counsel for the husband was the decision of Ryan v Joyce (supra) that was made prior to the Full Court’s decision in Senior v Anderson (supra). Although the agreement in that decision was signed by the wife prior to marriage and the husband after marriage, it differs in one significant respect from the matter before the Court in that, the in that decision husband agreed to sign the agreement knowing, on the receipt of advice from his solicitor, that the agreement proposed to be a financial agreement between the parties was unenforceable as it did not comply with the relevant provisions of the Act. With the knowledge that the proposed agreement was unenforceable the husband made a calculated decision to sign the agreement and communicated his acceptance to the wife by handing her the executed agreement. At the time the husband communicated his acceptance he “made no mention of [the agreement] being unenforceable, invalid or otherwise defective”. After the parties separated the husband later brought proceedings to set aside the financial agreement on the basis that it was unenforceable.

Federal Magistrate Neville reasoned that the ‘slip’ in relation to the relevant section that the financial agreement was to be made under was a consequence of the husband signing the agreement when he “got around to signing it” and that the slip should be rectified. The Federal Magistrate stated at paragraph 63 that:

“Whatever was, and what was not, said (or now disputed) between the parties, the reality is that an agreement was signed by [the husband].  Until now, he has taken no action to set aside or otherwise to challenge the document that bears his signature, which was placed on it on 5th October 2004.  In my view, objectively construed, he must be taken to be bound by what he signed.  Whatever his internal reservations or intention, his external action was such that he exhibited to all, and particularly to [the wife], that he agreed to the terms of, and to be bound by, the agreement.”

With respect to the Federal Magistrate, the decision of Ryan v Joyce (supra) is not binding and can be distinguished from the matter currently before the Court. As distinct from that decision, in the matter before the Court the wife agreed to be bound by the terms set out in the Agreement that constituted a s 90B financial agreement intended to be a pre-nuptial agreement, not a s 90C agreement, and the husband’s acceptance was not communicated to the wife and she was not provided with a copy of the executed Agreement after the husband signed the Agreement on 16 April 2003 within a reasonable time. Another significant difference is that in Ryan v Joyce (supra) the husband sought to set aside the agreement in that decision in circumstances where he had actual knowledge that the agreement was unenforceable prior to signing it, and due to that advice he signed the agreement and deliberately did not inform the wife of his understanding that the agreement was unenforceable.

In the matter before the Court, on the evidence provided, the wife did not receive an executed copy of the Agreement within a reasonable time after 16 April 2003, and from paragraphs 19 and 20 of the wife’s affidavit, I conclude that the wife did not have actual or constructive knowledge that, due to the husband’s execution of the Agreement on 16 April 2003, the Agreement was unenforceable.

In the matter before the Court there is not a written agreement that constitutes an “agreement” at law or a “financial agreement” under s 90B or 90C of the Act and (putting aside arguments that could arise pursuant to s 90K) from the recitals and operative clauses of the Agreement, and the affidavit evidence of the parties, it is not apparent that there was a common intention to enter into an agreement under s 90C of the Act.

In my opinion, although it was not addressed in submissions by the parties, it appears that there could be said to have been a continuing common intention to enter into an agreement under s 90B, but the question remains as to whether that common intention would have ceased when the parties married on 13 April 2003. However, even if there was a continuing common intention I am not convinced that there was a common mistake in the execution of the Agreement. In my view, as submitted by counsel for the wife, the mistake in the matter before the Court relating to whether the Agreement was to be made under s 90B or s 90C was not a common mistake. This is because the mistake arose as a result of the husband’s failure to accept the wife’s offer before the parties were married on 13 April 2003.

It follows that the mistake can only be categorised as a unilateral mistake on the part of the husband. This was inferred by counsel for the wife in his submissions by reference to the decision of Taylor v Johnson (1983) 181 CLR 422. The mistake was unilateral as only the husband was mistaken as to the time for acceptance of the wife’s offer in the form of the written Agreement signed by the wife on 11 April 2003. On the evidence before the Court, the wife was unaware of the husband’s misapprehension as acceptance was not communicated to her by the husband and she did not receive an executed copy of the Agreement signed by the husband on 16 April 2003 within a reasonable time.

Counsel for the wife argued that Taylor v Johnson could be distinguished as in that decision the unilateral mistake was known to the party that sought to enforce the agreement and that party did not bring the mistake to the attention of the other party. However, the decision is able to be distinguished on the basis that in Taylor v Johnson the Court set the agreement aside on the basis that the conduct of the party that knew of the unilateral mistake was unconscionable. Even if it was the case that the wife in this matter had knowledge of the husband’s unilateral mistake and did not bring it to his attention in order to avoid the agreement, it is not clear that rectification would be available to make the agreement a financial agreement under s 90B. As stated in Chitty on Contracts: Volume 1 General Principles, (30th Ed, 2008) at paragraph 5-117:

“In the Australian case of Taylor v Johnson the High Court had held that this sort of unconscionable conduct on A’s part would suffice for the contract to be rescinded on the ground of mistake. The same principle does not necessarily apply to cases of rectification, since the court is not simply undoing the bargain but also imposing a different bargain on A.”

As is evident from Sindel v Georgiou (supra) rectification is not a remedy that brings an agreement into existence where the parties have not arrived at a concluded agreement, particularly in circumstances where one party is mistaken as to a term of the agreement and the other party is not aware of that misapprehension. In that regard the matter before the Court is distinct from both Senior v Anderson (supra), where there was a common mistake, and Ryan v Joyce (supra) where there was a unilateral mistake known to the husband before he signed the agreement. In the matter before the Court there is no common mistake and therefore no common intention to give rise to rectification as a remedy. Further, it is unsettled whether rectification would be available even in the event that the wife knew of, and relied upon, the unilateral mistake of the husband to avoid the effect of the Agreement.

It follows that the Agreement cannot be rectified to be an “agreement” or a “financial agreement” under s 90C, or s 90B, of the Act.

THE CERTIFICATES AND SECTION 90G

Section 90G as amended by the provisions of Transitional Act cannot be complied with as subsection (1) states “a financial agreement is binding if…” and subsection (1A) states “a financial agreement is binding… if” and I have found that there is no agreement between the parties and no financial agreement under either s 90C or s 90B. In the absence of a financial agreement under s 90B or s 90C the provisions of s 90G have no operation and it is therefore not necessary to discuss the compliance of the certificates annexed to the Agreement under s 90G. However, as the submissions were substantially directed to this aspect of the matter I would comment that, in my view, even in the event that the Agreement could be rectified to be a financial agreement under s 90B, on the evidence before the Court, the financial agreement as rectified would not comply with s 90G as amended by the provisions of the Transitional Act, and I will give brief reasons for that conclusion.

The submissions of the parties at the hearing (as set out above at paragraphs 28 to 33 for the husband, and paragraphs 42 to 44 for the wife) directed significant attention to whether the certificates could be said to comply with s 90G(1)(b). Counsel for the husband sought to distinguish the decision of Balzia v Covich (supra). In that decision Collier J discussed whether in rectifying an agreement to refer to s 90C when it previously referred to s 90B the certificates that erroneously referred to s 90B could also be rectified. Although that decision was delivered prior to Senior v Anderson (supra), and importantly before the commencement of the Transitional Act, his Honour’s reasoning is relevant to the certificate issue. Consistent with the reasoning of Strickland and Murphy JJ in Senior v Anderson (supra) at paragraphs 138 to 143, Collier J concluded at paragraph 31 that the certificates could not be rectified and stated at paragraphs 32 to 33 that:

“Thus, to my mind, if I were to allow rectification of the deed itself, then the dichotomy would arise that the deed related to section 90C, but the certificates, because of the view that I have expressed that I cannot rectify them, remain expressing and nominating section 90B as the section of the Act to which the advice given as referred to in the certificate was directed.

It seems to me that this is of particular significance. I am of the view that sections 90B and 90C do not involve the same concept. I am satisfied that to properly advise their clients, the solicitors giving the advice and completing the certificates would need to approach the agreement to be made under one such section differently from the approach to be taken and the advice to be given (which is the subject of the certificate), if the agreement is to be made under a different section. I do not know what the advice given was. It seems to me, however, fundamental that the Act draws a distinction between the two sections. Accordingly, I am of the view that it would be essential to require anyone giving proper advice, to give that advice in respect of the document being executed, and the situation that would be created by the execution of that document, and thus to make particular and accurate reference to the section under which the document was created and to have effect.” (my emphasis)

In Senior v Anderson (supra) the certificates erroneously referred to the provision of advice to persons other than the relevant spouse parties to the agreement, as opposed to an erroneous reference to s 90B or s 90C. Notwithstanding my decision at first instance in Senior v Anderson [2010] FamCA 601, I now accept that the majority of the Full Court in Senior v Anderson (supra) concluded, consistent with Collier J above, that the correct approach is that certificates cannot be rectified and that regard must be had to the provisions of s 90G in relation to erroneous certificates. In circumstances where an agreement is rectified to reflect the common intention of the parties, the advice provided to each spouse, and the certificates evidencing that advice, cannot be amended to reflect the rectification. Hence if the agreement in this matter were able to be rectified to be a s 90C financial agreement then the advice provided to the wife on the Agreement as a s 90B agreement would be deficient pursuant to s 90G(1)(b) as amended.

However, the difficulty in the matter before the Court is that s 90G(1)(b) as amended is directed to the nature of the advice provided to a spouse party before signing the agreement not the compliance of the certification made by an independent legal practitioner evidencing the provision of that advice given the operation of item 8(6) of the Transitional Act and the removal of s 90G(1)(c) and (ca) initially inserted by item 2.

Section 90G(1)(b), as amended by the provisions of the Transitional Act, and as applicable to the Agreement made 16 April 2003, states that:

“(b)          before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about:

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

(ii)          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

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

(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”

In the absence of any oral evidence of the parties, or of their (then) solicitors, as to the advice each party received prior to signing the Agreement, I will refer to the relevant passages of the each party’s affidavit evidence as set out in paragraphs 12 to 20 above. On the evidence before the Court the wife received advice on the Agreement prior to the marriage of the parties and the husband received advice on the Agreement, after the marriage of the parties.

It follows that the wife received advice on the Agreement as a s 90B financial agreement as she was provided with advice before signing the Agreement, before marriage, in relation to  the effect of the Agreement on her rights under the Act and at law and in equity, on whether at that time it was; to her advantage to make the agreement; prudent to make the agreement; and whether the provisions were fair and reasonable. Accordingly, the wife received advice on the Agreement as required by s 90G(1)(b).

The husband, however, did not receive advice on the Agreement as required by s 90G(1)(b). The husband received advice after the marriage of the parties and in his affidavit at paragraph 14 he deposes that “I have been advised that pursuant to the Act a Financial Agreement entered into during marriage is an agreement pursuant to s 90C of the Act…”. Had the husband been advised on 16 April 2003 before signing the Agreement on the matters detailed in s 90G(1)(b) in relation to the effect of the Agreement on his rights to apply for an order under the Act or otherwise at law and in equity he would have on the 16 April 2003 known that if he signed the Agreement, as it then stood, it could not be a financial agreement made under s 90B prior to marriage, or under s 90C during marriage.

It is quite clear from the Act that advice in relation to a financial agreement under s 90B, and the effect of such an agreement on the rights of a party contemplating entering into a marriage, is distinct from the effect of a s 90C financial agreement on the rights of a party to a marriage.

It follows that s 90G(1) could not have been complied with as the husband did not receive the advice required under s 90G(1)(b) and s 90G(1)(b) is therefore not satisfied. As a consequence regard must be had to s 90G(1A), and particularly s 90G(1A)(c), to determine whether, notwithstanding non compliance with s 90G(1)(b), the Agreement should be declared binding under s 90G(1B). In my opinion, even in the event that the Agreement could be rectified to be a s 90B financial agreement, I would not exercise the discretion in s 90G(1A)(c) to declare the Agreement binding under s 90G(1B) as the wife was not provided with an executed copy of the Agreement by the husband or his (then) solicitors within a reasonable time after 16 April 2003 and accordingly, in those circumstances, I would not be satisfied that it would be unjust and inequitable if the Agreement were not binding.

COSTS

As to costs, the wife was substantially successful, and the husband wholly unsuccessful in the orders sought on this interim issue. The payment of costs and the quantum thereof were not addressed in the submissions on 22 August 2011. Nevertheless the wife sought an order for costs and disbursements of and incidental to the husband’s Initiating Application.

I foreshadow to both parties that it is probable that an award of reasonable and proper costs may likely follow the outcome of these interim proceeding but I nevertheless reserve to the parties the right to lodge written submissions as to the issue of what is a just costs order and as to the payment and quantum of costs.

I finally observe that the husband has not sought any costs order in the event that he were to succeed on his Initiating Application, and otherwise the wife has sought costs, in the usual form, and not on an indemnity basis.

I certify that the preceding One Hundred and Fifty Six (156) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 30 September 2011 .

 

 

Associate: ……………………………………………………………

 

Date:  …………………………………………………………………

 

 

Case cited by:

HOULT & HOULT [2011] FamCA 1023

Sullivan & Sullivan [2011] FamCA 752

HOULT & HOULT [2011] FamCA 1023

51.          No case was pleaded (or argued) that there was, by reference to s 4 and s 90B of the Act, no “financial agreement” between the parties (for example because what the husband asserts to be the agreement complete with schedules was, on the wife’s case, never capable of, nor was in fact, accepted by her. (cf Fevia & Carmel-Fevia (2009) FLC 93-411; Sullivan & Sullivan [2011] FamCA 752, per Young J).

PASCOT & PASCOT [2011] FamCA 945

Sullivan & Sullivan [2011] FamCA 752


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