Financial Agreement set aside after finding Wife had no “free will”

Print Friendly, PDF & Email

By Sally Baker, Special Counsel and Rebecca Brun, Lawyer

In a recent matter, the Husband appealed the decision of a judge of the Family Court of Australia, that had determined that the Financial Agreement entered into between the Husband and his Wife, Ms Corelli (“the Wife”) should be set aside after finding it was entered into by the Wife as a result of undue influence.

On appeal, the Full Court of the Family Court rejected the Husband’s appeal and upheld that the Financial Agreement was to be set aside.[1]

Background

By way of summary, the factual background of the matter includes:

  1. That that parties both migrated to Australia at different times from different countries;
  2. That initially, the parties had difficulty communicating as a result of language barriers;
  3. That the Husband told the Wife early on in the relationship that he wanted her to sign a Financial Agreement;
  4. That the Financial Agreement was drafted in English and was not translated for either the Husband or the Wife;
  5. The Financial Agreement provided that the Wife would not be entitled to make any claim on the assets which the Husband brought into the relationship (or vice versa), no matter the length of relationship or the contributions either party made. The assets built during the relationship however would remain capable of being divided;
  6. The Wife signed the Financial Agreement in March 2011, and the Husband signed in April 2011;
  7. The relationship ended in May 2016 and the Wife commenced proceedings in the Family Court of Australia on 16 May 2016 seeking orders setting aside the Financial Agreement; and
  8. The Wife claimed a variety of relief to impugn the Financial Agreement including, but not limited to, undue influence and unconscionability.

The Primary Judges’ decision

A critical issue for the primary judge’s findings of undue influence and unconscionability was the Wife’s proficiency in English at the time she signed the Financial Agreement.

The primary judge found that:

  1. By the time the Wife entered into the Financial Agreement the Wife was still not proficient in English;
  2. That the Wife intended to sign the Financial Agreement without having read it, and that the Husband insisted that she do so;
  3. That the Husband would not have contemplated the Wife living with him for more than three years had she refused to sign the Financial Agreement;
  4. That the Husband downplayed the significance of the document to the Wife and “likely gave the impression that it was simply a piece of paper” and emphasised it was “practically compulsory” for her to sign the agreement;[2] and
  5. That the Husband knew that the Wife was dependent upon him in order to obtain permanent residence in Australia, and that the Wife was aware that she could potentially be deported because she was not living with her son as per the student guardian visa requirements.

The primary judge also found that the Wife could not have had any real understanding of the Financial Agreement as to the sort of claim she would be giving up, as a result of a discussion with her solicitor for some mere 30 minutes.

The Appeal

On appeal, the Full Court agreed with the primary judge’s decision that the Wife likely had not signed the Financial Agreement of her own free will. The Full Court agreed with the primary judge’s statement that:

I am satisfied that there was actual undue influence, by virtue of the following matters:

(a) The general position of dominance which the husband had in relation to the wife;

(b) His insistence, over a considerable period of time, that the BFA be signed, and his later insistence it be signed without amendment;

(c) The wife’s fear that he may inform immigration authorities that she was in breach of her visa conditions;

(d) The husband and wife’s knowledge that, in order to obtain an [sic] permanent visa, the relationship needed to continue, but it could only continue if the BFA was signed; and

(e) The wife’s dependence upon the husband for accommodation and income in Australia.[3]

The Full Court also agreed with the primary judge that the Wife was in a special disadvantage in dealing with the Husband for a variety of factors including that she could not read, speak or understand English well and was dependent on the Husband to assist her to do so, and that she could not read the Financial Agreement and he could.

Finally, the Full Court agreed that the Wife likely would have had no real understanding of the Financial Agreement and noted that nowhere in the evidence, whether in the wife’s solicitors’ file note or otherwise, was there evidence of an explanation of the advantages and disadvantages of entering into the Financial Agreement – “Given the 30 minute duration of the meeting along with the wife’s lack of proficiency in English, any explanation given to the wife would have been wholly inadequate for her to understand the advantages and disadvantages of signing the BFA”.[4]

This case highlights the importance of ensuring that parties to a Financial Agreement are on equal footing and fully informed before the enter into the Agreement, particularly if one party is not fluent in or cannot read English. In such cases, the Financial Agreement should be interpreted, and an interpreter should be present at the time of signing. Further, legal practitioners must give detailed advice as to the nature and effect of a proposed Financial Agreement including its advantages and disadvantages.  It is not enough to simply advise the client that the BFA is unfair and they should not sign it (as occurred in this case).  It is also preferable for this advice to be confirmed in writing and acknowledged by the client.

[1] Beroni & Corelli (2021) FLC 94-004; [2021] FamCAFC 9.

[2] Corelli & Beroni [2019] FamCA 911 [191].

[3] Ibid [214].

[4] Beroni & Corelli (2021) FLC 94-004; [2021] FamCAFC 9 [35]

For further information, please do not hesitate to contact us.

Get the latest news insights and articles straight to your inbox, simply enter your details.

    *
    *
    *
    *Required Fields

    COVID-19

    Resumption of face to face hearings