In 2006, Benjamin J in the Family Court at Hobart was asked to consider Mr Black’s application to set aside a financial agreement executed by the parties in September 2002. The parties had a short marriage of 18 months during which they entered into a financial agreement.
The husband was aged 42. His income earning capacity was affected by a back injury for which he had received a damages claim. The wife was aged 41, worked part-time and received a disability pension for injuries she sustained in a motor vehicle accident. The wife had not yet received any damages for her injuries. The husband brought into the marriage approximately $200,000, which was used to purchase the former matrimonial home. When the parties separated, the total asset pool was valued at approximately $347,000.
The terms of the agreement were negotiated with the assistance of solicitors. The husband’s solicitor signed the certificate of independent legal advice and then his client signed the agreement. The wife consulted a solicitor, who amended a clause and then signed the certificate of independent legal advice.
The wife signed the agreement and gave the amended document to her husband who took the document back to his solicitor to have his signature to the amendment witnessed. He was not provided with a further certificate of independent legal advice.
At the date the agreement was signed, the wife had commenced a common law personal injuries claim. The agreement provided for an equal division of the existing property and of any funds received by the wife in the future from her personal injuries claim.
Unexpectedly, the wife received only $41,000 from her common law claim (a figure much lower than the husband had expected). Given his superior pre-marriage contributions and the length of the marriage, the husband could have expected to receive significantly more than 50 per cent of the value of the existing property had the agreement not been in effect. The husband sought to set the agreement aside, arguing that the provisions of s90G(1) had not been complied with.
He argued that there were three key flaws which offended s90G(1):
Benjamin J dismissed the application and adopted an enlightened approach in interpreting s90G. He considered that the legislature intended financial agreements to be set aside in only limited circumstances or where the parties had not obtained legal advice. He decided that the Court’s approach should be to “give effect to agreements under Part VIIIA, taking into account the protections offered to parties under the Part, including the requirements set out in s90G and the broader protections provided in s90K and s90KA”.6
His Honour found that the interpretive approach preferred by Collier J in the earlier case of J & J frustrated the meaning and purpose of the legislation, and that the legislature’s intention was to enable parties to enter into financial agreements provided they had the benefit of independent legal advice. He noted that “If courts require strict interpretation of the legislation then this would have the effect of making such agreements less available to the broader community ... [and would] limit the pool of legal practitioners who are equipped and willing to draft and/or advise in relation to such agreements”.
The husband appealed Benjamin J’s decision and on 24 January 2008 the Full Court overturned the trial judge’s decision. In construing s90G in the strictest sense, the Full Court emphasised the public policy shift and political climate in which the legislature enacted Part VIIIA.
The Full Court noted that the “amendments to the legislation that introduced a regime whereby parties could agree to the ouster of the Court’s power to make property adjustment orders reversed a long held principle that such agreements are contrary to public policy ... The compromise reached by the legislature was to permit the parties to oust the Court’s jurisdiction to make adjustive orders but only if certain stringent requirements were met ... ”.