Binding Financial Agreements

1. Binding Financial Agreements Patrick O’Shannessy Barrister | Victorian Bar Clerk | Paul Holmes Paul Fildes BEc LLB DipFamLaw Accredited Family Law Specialist (LIV) Partner | Taussig Cherrie Fildes Research by: Justine Clark BA LLB (Hons) Associate | Taussig Cherrie Fildes

2. Subject to subsection (1A), a financial agreement is binding on the parties to the agreement if, and only if: (a)the agreement is signed by all parties; and (b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and (c)either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and (ca) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and (d)the agreement has not been terminated and has not been set aside by a court. (1A) A financial agreement is binding on the parties to the agreement if: (a) the agreement is signed by all parties; and (b) one or more of paragraphs (1)(b), (c) and (ca) are not satisfied in relation to the agreement; and (c)a court is satisfied that it would be unjust and inequitable if the agreement were not binding on the spouse parties to the agreement (disregarding any changes in circumstances from the time the agreement was made); and (d) the court makes an order under subsection (1B) declaring that the agreement is binding on the parties to the agreement; (e)the agreement has not been terminated and has not been set aside by a court.

3. Contractual Elements • must be an agreement per contractual principles (Senior & Anderson) Pre-nuptial & agreements made during marriage & after divorce: • must be expressed to be made per section 90B, 90C, 90D and comply with requirements of the section • Ss 90B, 90C and 90D require that the parties must not be parties to any other BFA, must provide for how property and financial resources will be dealt with in the event of a breakdown of the marriage • section 90B – must be executed by both parties prior to marriage • section 90C – must be executed by the parties during a marriage (before or after it has broken down) • section 90D – must be executed after divorce order is made

4. Contractual Elements Pre-nuptial & agreements made during marriage & after divorce: • Section 90DA – for section 90B and 90C agreements, parties must execute a separation declaration for the agreement to be enforceable and effective following separation but prior to a divorce order being made. • Section 90E – a provision in a section 90B, 90C or 90D agreement in relation to the maintenance of a party or children must state for whom the maintenance is provided and the amount/value of the maintenance or the provision is void

5. Contractual Elements De facto agreements before, during & after relationship • must be expressed to be made per section 90UB, 90UC or 90UD and comply with requirements of the section • parties must not be parties to any other BFA, must provide for how property and financial resources will be dealt with in the event of a breakdown of the de facto relationship • Section 90UB – must be executed by parties before entering into a de facto relationship • Section 90UC– must be executed by parties that are in a de facto relationship

6. Contractual Elements De facto agreements before, during & after relationship Section 90UD - must be executed by parties to a former de facto relationship that has broken down Section 90UF – for section 90UB, 90UC or 90UD agreements, parties must execute a separation declaration for the agreement to be enforceable and effective following separation

7. Section 90G – see Annexure A (1)(a)agreement must be signed by the parties (1)(b) parties must be provided with the requisite independent legal advice from and Australian Legal Practitioner (1)(c) and (ca) the parties must be provided with a signed certificate/statement stating that the advice was provided if (1)(b), (c) or (ca) not complied with agreement will still be binding if and only if the court is satisfied that it would be “unjust and inequitable” if the agreement were not binding

8. Equitable provisions - safeguards • Section 90K (section 90UM) • An agreement may be set aside for:- • fraud (common law and equitable) and / or material non-disclosure; • an intention to defeat creditors or a reckless disregard for the interests of creditors; • an intention to defeat a de facto financial claim or reckless disregard for the interests of a de facto party; • ifvoid, voidable and unenforceable and not able to be rectified; • impracticality; • material change in a party’s circumstances; • unconscionable conduct (undue influence / duress); and • Issues arising in relation to superannuation provisions.

9. Equitable provisions - safeguards Section 90KA (section 90UN) an agreement may be enforced or rendered void, voidable or unenforceable pursuant to the principles of common law (contract) and equity. e.g. may be void for uncertainty or enforced notwithstanding deficiencies due to acquiescence and laches

10. Considerations for practitioners Recitals – set out the background to the parties’ relationship in recitals Operative provisions – consider the necessary operative provisions dependent on the matter and the party for whom you are acting Records – retain file notes and all drafts of the agreement, provide a comprehensive letter of advice and a statement to be signed by your client acknowledging the receipt of the advice. Provide further letters of advice if the agreement is substantially amended. Ensure your client receives a copy of the statements and that they are annexed to the agreement.

11. Considerations for practitioners Professional liability – consider the other practitioner and the circumstances of the other party – is the other party at a special disadvantage? is there a presumption of undue influence? Duress? Negligence - consider the risk of a subsequent negligence claim have you provided sufficient advice on the agreement for it to be binding? Have you advised your client that if the other party’s advice is deficient the agreement could be set aside? Have you advised your client of any deficiencies in the agreement that could render it void, voidable or unenforceable

12. Binding Financial Agreements • In summary to have a binding financial agreement there must: • be an agreement pursuant to contractual principles • the agreement must comply with the requirements of the relevant section • the agreement must comply with the requirements of the applicable form of s 90G • the agreement must not be able to be set aside on the basis of any of the grounds in s 90K If the above are met the financial agreement will be binding and it will oust the jurisdiction of the Court in Part VIII proceedings to the extent that it covers financial matters or financial resources.

13. Questions and comments Thank you for your attention…