Which case won?

casea
The case for the husband
  • It is not just and equitable to divide our joint assets equally, given that we did not contribute equally to the purchase of the family home.
  • The court should take a literal approach to the interpretation of the Act and insist on strict compliance with all the requirements.
  • In this case, there wasn’t strict compliance because we should have each received independent legal advice after the agreement was altered, but this did not happen.
  • The binding financial agreement should therefore be set aside.
caseb
The case for the wife
  • The agreement should stand because it accurately reflects what our intentions were at the time we entered into it.
  • If my ex had wanted to amend the agreement, he should have sought to do that when I settled my personal injury claim, but he didn’t.
  • There was substantial compliance with the requirements of the Act and the court should take a purposive approach, as the trial judge did. That is, the purpose of the agreement was to divide our assets equally if we separated.
  • The court has no jurisdiction under the Act to adjust the distribution of assets in the way my ex is seeking.

So, which case won?

Cast your judgment below to find out
Case A Case B

Case A won. You were right!

How people voted
a22%
b78%

Expert commentary on the court's decision

“On appeal, the Full Court of the Family Court found that there was no reference to legal advice regarding whether the agreement was prudent, fair and reasonable. That meant that the agreement did not comply with the legislation and was therefore not binding on the parties.”
Conditions to be met for a financial agreement to be binding

The appeal in Black & Black [2008] FamCAFC 7 hinged on the interpretation of section 90G of the Family Law Act 1975 (Cth). At the relevant time, section 90G stated that a financial agreement is binding on the parties “if, and only if” certain conditions are met. This included each of the parties receiving independent legal advice in relation to whether the provisions of the agreement were prudent, fair and reasonable. (Section 90G has been amended since the decision in this case.)

On appeal, the Full Court of the Family Court found that there was no reference to legal advice regarding whether the agreement was prudent, fair and reasonable. That meant that the agreement did not comply with the legislation and was therefore not binding on the parties.

Agreement found to be flawed and set aside

The court observed that the Commonwealth parliament had created section 90G to remove some of the restrictions that had previously existed on the rights of parties to arrange their own affairs as they saw fit.

The compromise it reached was to permit parties to oust the court’s jurisdiction to make adjustive orders, but only if certain stringent requirements were met. For that reason, it was important that the court take a strict and literal approach when interpreting that section of the Act.

While the husband had argued that the agreement should be set aside because it had not been re-certified after being amended, the court found that it was not necessary to determine this point because the agreement itself was defective, as it did not adhere to the statutory requirements.

As a consequence, the property was not split 50/50 as originally agreed. Instead, the husband received a larger share of the asset pool.

Attempt to engineer financial advantage backfires

Apart from anything else, the case serves as an interesting study in human motivation and how the best-laid plans can backfire. The trial judge noted that the husband had raised the matter of a binding financial agreement several times before the couple got married because he was hoping to share in an anticipated windfall from his wife’s personal injury claim.

By forming an agreement that they would split the proceeds of the sale of the house 50/50 in the event of a separation, the husband was trying to engineer a financial advantage for himself. However, as events transpired, he could well have been caught out by the very arrangement he had hoped would shore up his position. Luckily for him in this case, there were some technical flaws in the binding financial agreement that meant it could not be enforced by his ex.

The case also serves as a reminder that binding financial agreements are highly technical documents and are not always the right choice for couples looking to achieve some certainty about their affairs if they break up. It is very important to seek expert legal advice if you intend to enter into enter into a binding financial agreement.

Have your say

Other cases