The Truly Binding Financial

Agreement? - Is Concise
Drafting the Key?
THE TRULY BINDING FINANCIAL AGREEMENT - IS CONCISE DRAFTING THE
KEY?

Drafting Masterclass for Family Lawyers

Video Webinar
25 March 2020
Jacky Campbell
Forte Family Lawyers

In a post Thorne v Kennedy [2017] HCA 49; (2017) FLC 93-807 landscape, it is important to draft
financial agreements with precision, fairness and full disclosure. This paper concentrates on the
drafting essentials to minimise the risk of a financial agreement under the Family Law Act 1975
(Cth) (FLA) being found not to be binding or being set aside. It covers:

1. Ensuring compliance with the relevant sections of the FLA

2. Independent legal advice and acknowledging that the advice has been received

3. Drafting to show full disclosure

4. Drafting for clarity and to avoid uncertainty

5. Complex agreements:

5.1 Pros and cons

5.2 Maintenance

5.3 Termination and sunset clauses

6. Drafting to demonstrate fairness in the terms – dealing with the test for “bad bargain”

7. Drafting to demonstrate no disadvantage or duress – is this a relevant consideration?

8. The problem of false recitals

9. Drafting lessons from Thorne v Kennedy

10. Other drafting tips.

1. Ensuring compliance with the relevant sections of the FLA

The basics

Before starting to draft a financial agreement, re-read s 90G(1) and (1A) (or the de facto
equivalents, s 90UJ(1) and (1A)), s 90K (or 90UM noting that the de facto equivalent is differently
worded) and s 90KA (s 90UN). This ensures that the requirements and the wording are front of
mind while drafting the agreement. Sections 90G and 90G(1A) set out when an agreement is
binding. Section 90K sets out when an agreement can be set aside and s 90KA deals with the
enforceability of financial agreements.
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The agreement needs to comply with one of s 90B, 90C, 90D, 90UB, 90UC or 90UD, or be a
termination agreement under s 90J or 90UK, so it is important to re-read the relevant section.
There are subtle but important differences between them. As an example, s 90B states:

(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.
(2) 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:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.
(3) 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.

By contrast financial agreements under Pt VIIIAB, which deal with de facto relationships, cannot
contain “other matters” or deal with property and financial resources acquired after separation.

With respect to Pt VIIIAB agreements, a de facto relationship under the FLA is required for the
agreement to be effective. If it is a s 90UB agreement, the planned de facto relationship needs to
commence or the agreement will not operate. The parties must be ordinarily resident in a
participating jurisdiction (i.e. not in Western Australia or overseas) when they make the agreement
(s 90UA). In Darrow & Malden and Ors [2017] FamCA 497, the parties separated in 1993, and
entered into the agreement in 2011. Although the agreement could have been made under the
FLA it was not. In Teh & Muir [2017] FamCA 138, the parties were found to have never been in a
de facto relationship. So the agreement, which was purportedly made under s 90UC, was not a
financial agreement under the FLA.

When is an agreement binding?

An agreement is binding if it complies with s 90G(1) (or s 90UJ(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
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(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."

In the original version of s 90G the wording of the advice required was different to the current
version and that wording had to be reflected in the wording of a clause in the body of the
agreement (Black & Black (2008) FLC 93-357). This is no longer the case, but a clause stating the
advice has been provided, repeating the wording of the current s 90G(1)(b), is usually included in
the body of an agreement.

To mitigate the strict technical interpretation of s 90G following Black & Black and to make it more
difficult for financial agreements to be set aside, remedial sections were introduced into Pt VIIIA
and Pt VIIIAB relieving against the consequence of an agreement not meeting the requirements of
s 90G(1)(b), (c) and (ca) (or s 90UJ(1)(b), (c) and (ca)). Section 90G(1A)–(1D) allows certain
agreements which do not comply with s 90G(1) to be "saved". Section 90UJ is similarly worded.

The effect of s 90G(1A) is that an agreement which does not meet all the other requirements of
s 90G(1) but is signed by all parties may be saved "if a court is satisfied that it would be unjust and
inequitable if the agreement were not binding on the spouse parties". In considering this, any
changes in circumstances after the agreement was executed are irrelevant. Of course, agreements
entered into between 14 January 2004 and 4 January 2010 have the added complexity of
interpreting the transitional provisions which was identified in Hoult & Hoult (2013) FLC 93-566 and
Parker & Parker (2012) FLC 93-499.

Avoiding an agreement being set aside

An agreement which is otherwise binding can be set aside on any of the grounds in s 90K
(s 90UM). Section 90K provides that:

"(1) A court may make an order setting aside a financial agreement or a termination
agreement if, and only if, the court is satisfied that:
(a) the agreement was obtained by fraud (including non-disclosure of a material
matter); or
(aa) a party to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding or
defeating a creditor or creditors of the party; or
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(ii) with reckless disregard of the interests of a creditor or creditors of the party; or
(b) the agreement is void, voidable or unenforceable; or …
(c) in the circumstances that have arisen since the agreement was made it is
impracticable for the agreement or a part of the agreement to be carried out;
or
(d) since the making of the agreement, a material change in circumstances has
occurred (being circumstances relating to the care, welfare and development
of a child of the marriage) and, as a result of the change, the child or, if the
applicant has caring responsibility for the child (as defined in subsection (2)), a
party to the agreement will suffer hardship if the court does not set the
agreement aside; or
(e) in respect of the making of a financial agreement — a party to the agreement
engaged in conduct that was, in all the circumstances, unconscionable; or
(f) a payment flag is operating under Part VIIIB on a superannuation interest
covered by the agreement and there is no reasonable likelihood that the
operation of the flag will be terminated by a flag lifting agreement under that
Part; or
(g) the agreement covers at least one superannuation interest that is an
unsplittable interest for the purposes of Part VIIIB.
(1A) For the purposes of paragraph (1)(aa), creditor , in relation to a party to the
agreement, includes a person who could reasonably have been foreseen by
the party as being reasonably likely to become a creditor of the party.
(2) For the purposes of paragraph (1)(d), a person has caring responsibility for a
child if:
(a) the person is a parent of the child with whom the child lives; or
(b) a parenting order provides that:
(i) the child is to live with the person; or
(ii) the person has parental responsibility for the child.”

Other things to remember

Other matters to consider when drafting a financial agreement include:

 Section 90UM, which applies to agreements between de facto couples, is worded similarly
but not precisely the same as s 90K and the numbering is different;

 Section 90G(1A) (and 90UJ(1)) are not linked to s 90K (and s 90UM). An agreement cannot
be “saved” under s 90G(1A) if it is at risk of being set aside under s 90K;

 Maintenance provisions must comply with s 90E and 90F (or s 90UH and 90UI);

 A separation declaration may be needed for certain clauses to take effect (s 90DA and 90UF;
s 90XP and 90XQ).
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2. Independent legal advice

Each spouse party must receive independent legal advice for a financial agreement to be binding
under s 90G(1)(b) (s 90UJ(1)(b) is worded similarly). The legal advice must be given about:

 The effect of the agreement on the rights of that party; and

 The advantages and disadvantages to that party of making the agreement, at the time that
the advice was provided.

The advice must be given by an Australian legal practitioner (Ruane & Bachmann-Ruane and Anor
[2009] FamCA 1101; Murphy & Murphy [2009] FMCAfam 270). There is no legal requirement for
third parties (who are not spouse parties) to be given legal advice but in practice this usually
occurs.

Burden of proof

The nature of and burden of proving independent legal advice was considered by the Full Court of
the Family Court in Hoult & Hoult (2013) FLC 93-566. Justice Thackray’s clear explanation (at [60]-
[63]) has been generally accepted:

“In my view, the onus of establishing that an agreement is binding falls upon the party
asserting that fact because the legislation provides that an agreement is binding “if,
and only, if” the prescribed matters are established. It follows that the party relying
upon the agreement must establish the existence of all those matters, including the
giving of the requisite legal advice to both parties.

I recognise the potential forensic difficulty faced by a party who seeks to uphold a
Financial Agreement when the other party claims not to have received the prescribed
legal advice. However, the fact there is difficulty in proving something within the
knowledge of only the other party and their solicitor does not mean the legal burden
of proof passes to the party who seeks not to be bound by the agreement.

Importantly, however, I consider that once the party seeking to rely upon the
agreement produces in evidence the certificate signed by the other party’s solicitor,
there is a forensic obligation on the other party to adduce evidence which would
disprove, or at least throw into doubt, the inference or conclusion to be drawn from
the certificate (especially when read with the recital in the agreement to the same
effect).

This forensic obligation is properly conceptualised as the burden of introducing

evidence and should not be confused with the burden of proof as a matter of law and
pleading. For a discussion of the difference see Purkess v Crittenden [1965] HCA
34; (1965) 114 CLR 164 especially at 167-168 per Barwick CJ, Kitto and Taylor JJ
and 170-171 per Windeyer J.”

In Logan & Logan (2013) FLC 93-555 the Full Court allowed the wife’s appeal as the trial judge
mis-applied the burden of proof. Following Hoult & Hoult (2013) FLC 93-546, the onus of proof lay
on the party seeking to establish that a financial agreement is binding. The husband could rely
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upon the Certificate (as it then was. The current s 90G(1) refers to a Statement) signed by the
wife’s solicitor as prima facie evidence that the advice was given and the forensic obligation was
then thrown to the wife to adduce evidence to disprove or at least throw into doubt the inference or
conclusion drawn from the Certificate. In this case, there was evidence to displace the inference.
The Full Court did not decide if that evidence was sufficient to displace the inference, but ordered
a re-trial.

Nature of the advice

How comprehensive and accurate must the advice be? If a party seeks to establish that the advice
was not given despite the prima facie evidence of a signed Statement of Independent Legal
Advice, what must that party show?

Different judicial views have been expressed as to the nature of the advice that must be given.
These inconsistent views include:

 The advice need not be correct (Justice Strickland in Senior & Anderson (2011) FLC 93-
470);

 It may not be possible to advise that there are both advantages and disadvantages. Justice
Strickland in Senior & Anderson interpreted s 90G(1)(b) (the agreement was entered into on
27 July 2009, but the Federal Justice System Amendment (Efficiency Measures) Act (No 1)
2009 (Cth) commenced on 4 January 2010 with retrospective effect)) as meaning:

“providing such advantages, if any, and such disadvantages, if any, as are

apparent to the legal practitioner providing the advice.”

 The parties are required to simply obtain advice, which does not mean that the advice needs
to be correct, accepted or followed (Justice Cronin in Ruane & Bachmann-Ruane [2009]
FamCA 1101);

 The effect and implications of an amendment to the agreement were not explained to the
wife in the same way that the terms of the original agreement were. Advice of a general
nature was insufficient (Justice Strickland (the trial judge) in Parker & Parker [2010] FamCA
664);

 Advice given to the wife by her legal practitioner was incorrect. She was told that the
agreement would not be binding. Justice Le Poer Trench said (at [325]):

“The point at issue in this case is that the legal advice was not only incorrect as to
the fairness of the agreement, it was wrong as to the major and pivotal effect of the
agreement, namely that the wife was surrendering her rights to seek any order
under Pt VIII of the Family Law Act. That is a substantially different circumstance
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to one where the party entering an Agreement understands that the agreement
may be important in proceedings between the parties under Pt VIII of the Act as
opposed to excluding the courts [sic] ability to consider any application under that
Part.”

The agreement was not set aside on this ground (but on other grounds), as the husband was
not aware of the wife’s erroneous advice (Pascot & Pascot [2013] FamCA 945);

 The absence of a list of assets and liabilities at the time of giving advice does not necessarily
mean that the advice required by s 90G was not given. Justice Murphy, the trial judge in
Hoult & Hoult (2011) FLC 93-489 said (at [66]):

“A practitioner providing the required advice might, of course, feel more

comfortable, or consider it prudent, to have a list of assets and liabilities so as to
give the client examples of the permutations that might be possible and what may,
or may not, be seen as ‘advantages’ or ‘disadvantages’ as a result. In addition, it
might well be that advice which can be seen to be comprehensive in terms of a
solicitor’s duties, or that which is desirable in light of s 90G’s ramifications, might
have many components to which a list of assets and liabilities might pertain. The
issue is not what prudence or practice might dictate, but what s 90G requires of
any advice.”

The Full Court allowed the appeal. One of the successful grounds was that the solicitor’s
certificate, particularly when read in conjunction with the recital in the agreement, should
have been treated at least as prima facie evidence of compliance with s 90G. It was remitted
for re-trial.

 Advice must be given under the FLA. It is not enough to simply give advice (at [91]) about
“the commercial terms of that agreement and make sure they were agreed to” (Justice
Jarrett in Adame & Adame [2014] FCCA 42);

 Advice must be given by the legal practitioner signing the Statement. The fact that the wife
had been given advice under the FLA by two previous legal practitioners was irrelevant to
finding compliance with s 90G as they did not sign the Statement (Adame & Adame [2014]
FCCA 42);

 Advice must be given in the terms set out in s 90G(1)(b). The legal practitioner’s role is not to
simply “give a certificate”, but to give the requisite advice (Renard & Geach [2013] FCCA
617). The length of time spent advising the client may be relevant. Judge Small said (at [83]):

“It is difficult to see how that role could be fulfilled in even a 50 minute interview,
as it would require detailed instructions being taken as to the assets and liabilities
of the marriage, the husband’s current position, and the history of the relationship
before even looking at the agreement. I therefore consider that I do not need to
make a finding on the exact length of time Mr Young spent alone with the
husband … as even on Mr Young’s evidence, it was not in my view long enough
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to take comprehensive instructions and give detailed and comprehensive advice

about the agreement.”

 The rights which are being ousted by the agreement must be identified. This requires looking
at the parties’ rights under s 79 FLA and then giving real and meaningful advice. Justice
Aldridge in Abrum & Abrum [2013] FamCA 897 said (at [42]-[43], [45]).

“Accordingly, the advice must be real and meaningful. It must be directed to the
parties’ circumstances and their present rights.

Proper identification of a parties’ rights can only be done by identifying the

property of the parties then held and a consideration of the parties contributions
(financial and non-financial) to the acquisition of that property and to the welfare
of the children. Any other relevant factors under s 79(4), including s 75(2), would
then need to be considered. Only by doing so can advice be given that complies
with the terms of s 90G(1)(b)…

Similarly, advice about the advantages and disadvantages for a party making the
agreement must involve a consideration and weighing of what would be their
rights but for entering the agreement and those advantages and disadvantages
after having entered the agreement. No doubt each would have its advantages
and disadvantages and they need to be compared.”

 A 15-minute conference was inadequate to give the advice required under s 90G(1)(b), as
well as advice in relation to Wills and testamentary dispositions, and to execute the
agreement and certificate, and dictate the file note. There was no evidence that the wife’s
legal practitioner took any financial history on the wife or discussed what rights she had
under Pt VIII of the FLA, particularly after she had children (she gave birth 8 days later with
the parties’ first child). Justice Watts in Raleigh & Raleigh [2015] FamCA 625, distinguished
the facts from Hoult as the certificates annexed to the agreement indicated that advice was
given on non-existent rights.

Independence of advice

The circumstances in which the legal advice given by a legal practitioner lacks independence are
unclear. Obviously, each party must have their own legal practitioner and they cannot be from the
same law firm. Circumstances in which the advice may arguably be considered to be tainted
include where the legal practitioner is:

 selected by the other party;

 selected and paid for by the other party;

 paid for by the other party: or

 paid for by the other party on the pre-condition that the costs are not greater than a certain
amount.
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The cases dealing with financial agreements under the FLA have confirmed the independence of
the advice in at least the first three of the above four situations.

Cases: legal advice found to be independent

In Adame & Adame [2014] FCCA 42 the husband paid for two of the three legal practitioners seen
by the wife. The first two refused to sign the Certificate of Independent Legal Advice. The third
legal practitioner signed the Certificate of Independent Legal Advice on behalf of the wife, but was
located and instructed by the husband and the file was opened in his name and emails were sent
to his address. The husband had not provided the legal practitioner with the wife’s email address.
The independence of the legal practitioner was accepted by Jarrett J who was satisfied that,
contrary to the wife’s evidence, the agreement was signed by the wife without the husband being
present. However, Jarrett J found that the advice did not meet the requirements of s 90G(1) on
another ground, because the legal practitioner who gave the advice required by s 90G(1)(b) was
not the legal practitioner who signed the certificate. The legal practitioner who signed the certificate
said he did not give the advice required under the FLA (despite signing the certificate) and that he
was only concerned with the “commercial terms” of the agreement and whether those terms
reflected the parties’ intentions.

In Logan & Logan [2012] FMCAfam 12, Terry FM found that the wife had independent legal
advice. There were considerable arguments against the advice being independent, despite the
Federal Magistrate’s finding that it was independent. Factors which in other cases might have
been used to support a finding that there was no independent legal advice were:

 The parties jointly attended three of the wife’s four meetings with the wife’s legal practitioner.
The husband’s legal practitioner was not present;

 The wife’s legal practitioner had prepared wills for both parties;

 After the agreement was executed the wife’s legal practitioner effected the transfer of the
home to the husband at the husband’s request;

 The only conference the wife had with the legal practitioner without the husband being
present was the last of the four conferences, when she executed the agreement;

 The wife’s legal practitioner’s file note did not contain any reference to advice being given to
the wife at the last conference and the husband did not contend that it was given at any of
the previous three meetings;

 The husband ultimately paid the wife’s legal practitioner’s account (probably not a persuasive
factor, at least on its own);
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 When the wife sought parenting advice after the agreement was signed, her legal practitioner
told her that he could not assist her because he had acted for both parties in the property
matter.

After 23 years of marriage the wife received only 15% of the pool but the court, in upholding the
agreement, seemed to be swayed by a finding that the wife was not under any special disability,
the wife felt guilt about ending the marriage and that the wife made the initial approach to the legal
practitioner who gave her advice. The appeal was allowed for other reasons.

The wife unsuccessfully argued that her legal advice was not independent in Balzia & Covich
[2009] FamCA 1357. She was taken by the husband to see the legal practitioner and she asserted
that the legal practitioner was mainly her husband’s legal practitioner. Justice Collier accepted that
the husband was told to go away on the first occasion the wife saw the legal practitioner and that
the husband had his own legal representation. The agreement was found not to be a valid
agreement on other grounds, and therefore was of no force and effect.

In Vance & Vance [2012] FMCAfam 599, Baumann FM was satisfied that the wife received
independent legal advice in circumstances where:

 Unbeknownst to the wife, the legal practitioner had acted for the husband five or six years
prior and they fell out over fees;

 The husband arranged the appointment, paid the wife’s legal fees, and accompanied the
wife to the appointment;

 The legal practitioner had previously practised in family law but had spent the previous eight
years concentrating on commercial, conveyancing, wills, estates and aviation law.

Federal Magistrate Baumann found that the legal practitioner was independent and was not
required, nor was he able to, assess all the future financial permutations that this couple’s financial
journey could take. He agreed with Murphy J in Hoult (at [63]) that the legislation does not prevent
parties from being “perfectly free to make a bad bargain” (an approach which is doubtful following
Thorne v Kennedy). In relation to the experience of the wife’s legal practitioner he concluded (at
[48]):

“I am satisfied that Mr King was both independent and a legal practitioner … I see
nothing in a requirement prescribed by the relevant section to impose any obligation
on the legal practitioner to have either specialist or other qualifications in family law.
The section requires, by inference, some knowledge of this area of law otherwise it
would be hard to be satisfied that the practitioner could be able to articulate the
‘advantage and disadvantages’ of the agreement or the effect of the agreement on
the rights of the party being advised. Mr King did have some experience in family law
over many years.”
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In Weldon & Asher [2014] FCWA 11, Thackray J found that the husband had independent legal
advice in circumstances where:

 The wife’s sister identified potentially suitable legal practitioners whose names were given to
the husband either by the wife or the wife’s sister;

 The wife’s sister made contact with the legal practitioners;

 The wife’s sister may have even made the appointment for the husband;

 The wife’s sister had a former professional relationship with the husband’s legal practitioner.

It was found that independent legal advice was provided in all of the above cases.

Cases: legal advice found to be not independent

The following cases are examples of where financial agreements were found not to be binding
because a party had not been given independent legal advice.

In Guest & Rasevic [2016] FamCA 91, the parties both saw the wife’s legal practitioner for the
execution of the agreement. They thought that the husband had waived his right to independent
legal advice. After initially seeking a declaration that the agreement be found to be binding under
s 90G(1B), the wife conceded that the agreement was not binding as the husband had not been
given independent legal advice

More recently, in Purdey & Millington [2018] FCCA 213, the wife had limited English and the
husband’s legal practitioner suggested a legal practitioner for the wife. The husband’s legal
practitioner suggested a legal practitioner for the wife. There was a dispute as to who made the
appointment for the wife to see the legal practitioner, but the trial judge found that the husband
probably made the appointment and that he was present when the wife saw the legal practitioner.
There was no interpreter when she was given legal advice. The agreement was held not to be
binding. Judge Jones found that the evidence before the court was sufficient to throw into doubt
the inference which could be drawn from the wife’s legal practitioner’s statement attached to the
financial agreement certifying that the wife was given independent legal advice, for the following
reasons:

1. The arrangement for the wife to be provided with legal advice was not independently made
by the wife. Rather, the husband arranged for the wife to attend on Ms J on the
recommendation of Mr K, his legal practitioner, who drew up the financial agreement;
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2. There was no record held by Sydney Legal House, the firm Ms J worked for when she met
with the wife, of the wife as a client. The capacity in which Ms J acted was questionable;

3. Ms J received the financial agreement at the commencement of her meeting with the wife
and the meeting took no longer than 20 minutes. In Judge Jones’ opinion, this was
insufficient time for Ms J to have explained to the wife, who had limited English speaking
skills, the wife’s rights under the relevant statute, the effects of the financial agreement on
her rights and the advantages and disadvantages of the financial agreement. Judge Jones
referred to Abrum & Abrum [2013] FamCA 897, where Aldridge J set out the obligations
upon a legal practitioner purporting to give legal advice under s 90G(1)(b) of the Act (at
[35]-[45]). In Judge Jones’ opinion, it would not have been possible for Ms J to have
complied with these obligations in a time period of ten to 20 minutes;

4. The husband was responsible for and paid the fee for the meeting between Ms J and the
wife;

5. The husband was present for the duration of the meeting between Ms J and the wife;

6. The absence of any file notes of the meeting supported an inference that there was a lack
of proper engagement by Ms J with the wife, a lack of competent legal service and a lack of
the provision of any legal advice at all.

In the circumstances it was not appropriate for the agreement to be held binding under s 90G(1A).

Proving compliance with s 90G(1)

Although s 90G(1) does not require the Statements of Independent Legal Advice to be annexed to
the agreement (as required in the first version of s 90G(1)), in practice they are usually annexed,
so as to ensure that they stay together and that there is clarity about the specific agreement for
which the advice was given.

Lawyers should be cautious about how they prove there has been compliance with s 90G(1)(c)
and (ca) (and s 90UJ(1)(c) and (ca)). Some lawyers draft a one page receipt or acknowledgement
where one party acknowledges receipt of the advice, receipt of the Statement of Independent
Legal Advice from their lawyer and receipt of the Statement of Independent Legal Advice from the
other legal practitioner at the same time. Sometimes, receipt of a copy of the full executed
agreement is also acknowledged, although the other party has not yet executed the agreement.
Section 90G(1) requires the parties to receive each other’s Statements of Independent Legal
Advice, but not a fully executed copy of the agreement. A signed acknowledgement of receipt of
the Statements of Independent Legal Advice of both legal practitioners and the fully executed
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agreement is good practice, but not a legislative requirement. There are three (or four) different
steps in complying with s 90G(1) and, although some can occur at the same time, they cannot all
be done concurrently. It is better to either divide the steps up into two separate receipts or
acknowledgements, or have receipts or acknowledgements signed by each of the parties after the
final step has occurred.

Of course, a written acknowledgement or receipt of the advice does not mean that a court cannot
go behind that acknowledgement, just as it can go behind a Statement of Independent Legal
Advice, e.g. Hoult & Hoult (2013) FLC 93-546 and Logan & Logan (2013) FLC 93-555.
Acknowledgements and the Statements of Independent Legal Advice are merely prima facie
evidence that the events occurred.

In Fevia & Carmel-Fevia (2009) FLC 93-411 one party did not receive a copy of the agreement
until seven years after it was executed. In Suffolk & Suffolk [No 2] [2009] FamCA 917 it was four
years. These cases were decided when s 90G(1) required one party to have an original of the
agreement and the other a copy. There was no temporal requirement in the provision, but the
courts seemed to be prepared to read it in.

In Purdey & Millington [2018] FCCA 213, the fact that the wife was not given a copy of the
agreement shortly after she had signed it (although it was no longer a legislative requirement) was
a factor in finding the agreement was not binding under s 90G(1A). Non-provision or delayed
provision of a copy of the executed agreement in a timely fashion seems to be problematic and
understandably so.

Adequacy of legal advice – the last word

More recently, and perhaps taking a more cautious approach following Thorne v Kennedy, the
requirement for “real and meaningful” advice expressed by Aldridge J in Abrum seems to have
been given greater weight.

In Daily & Daily [2020] FamCA 486 Berman J said (at [154]):

“I consider that whilst the correctness of the advice may not be a relevant inquiry, if the
evidence supported a finding that notwithstanding a certificate, there had not either been
any advice given or that it was so cursory or only tangentially related to the agreement, that
may well allow a finding that no advice was given.”

Justice Berman found that the wife was not given meaningful advice on handwritten amendments
and he then considered s 90G(1A) and to an agreement which fundamentally altered the
document so that it was a new financial agreement. He found that the agreement was not binding
 14

on the parties under s 90G(1). He then considered s 90G(1A) and found that it was unjust and
inequitable if the agreement was not binding because:

 The amendments were not a surprise to the wife;

 The wife had the opportunity of obtaining legal advice;
 It was reasonable for the husband to assume that the wife obtained the updated advice;
 The issue as to whether the agreement was binding was only raised 13 years later after the
parties separated.

In Kaimal & Kaimal [2020] FamCA 971 the legal advice given to the wife did not meet the
requirements of s 90G(1) FLA. Under cross-examination, the wife’s legal practitioner readily
conceded that he did not give her the requisite advice and he saw his role was only to be a
witness of her signature and explain the terms and conditions, although to do the latter he only
read out the agreement to the wife and told her it was binding. He said he didn’t have the
expertise to advise the wife on the matters required by s 90G(1)(b) and would have required
her to go elsewhere for that advice. Chief Justice Alstergren noted (at [16]):

“The requirement for legal advice is an important legislative safeguard. … Accordingly,

the legal advice must be real and meaningful to satisfy s 90G(1)(b).”

Chief Justice Alstergren also quoted favourably the above passage from Daily & Daily (which
was appealed on other grounds). He said this passage was consistent with the Full Court
in Hoult, and that he was fortified in his finding that the wife did not receive the requisite legal
advice by the significant errors and inconsistencies in the agreement. He said (at [48]):

“In circumstances where the errors in the Financial Agreement relate to the proportions
the parties were each to receive under the agreement (and the Financial Agreement
itself was internally inconsistent in those proportions), I am not satisfied that Mr B
identified these errors such that he could have, in any event, properly explained them
to the wife pursuant to the requirements of s 90G(1)(b).”

Chief Justice Alstergren refused to save under s 90G(1A) FLA because of the importance of
the advice requirement and the blatant errors in the agreement.

In Beroni & Corelli (2020) FLC 94-004 the Full Court of the Family Court considered the issue of
the nature of the advice required in the context of a finding of undue influence and unconscionable
conduct. Those findings could not be displaced by legal advice if the advice was inadequate.
Justice Aldridge was a member of the Full Court and was also the trial judge in Abrum.

The trial judge found that a rudimentary explanation of the agreement was given to the wife in
English, and although the legal practitioner had identified that an interpreter was required there
was no interpreter. The wife had not been given a copy of the agreement previously and in any
event was unable to read it. The advice could not therefore have been “fulsome” about a 14 page
 15

agreement as the advice was given in a 30 minute discussion. The wife could not in those
circumstances have had any real understanding as to the value of the claim she was giving up.

3. Drafting to show full disclosure

It may be considered prudent to include a provision in the financial agreement which confirms that
parties have provided full disclosure to each other in an endeavour to prevent a successful
application being made under s 90K(1)(a) for the agreement to be set aside for non-disclosure of a
“material matter”. Such clauses can be problematic though. For example, if the parties have not
provided full disclosure to each other then they should not sign a financial agreement which states
that they have done so. A willingness to declare something to be true which is not may raise
doubts about the state of mind of at least one of the parties. The problem of false recitals is
discussed in more detail later in this paper.

Leaving aside the issue of whether a financial agreement should include a clause about
disclosure, there are pros and cons for detailed disclosure being provided by parties entering into
an agreement. When parties have provided full details of their financial positions, then if there are
any errors it may be easier for the other party to successfully apply to set the agreement aside for
material non-disclosure under s 90K(1)(a), or misrepresentation or other grounds under
s 90K(1)(b). However, if the parties do not provide full details of their financial positions in the
agreement, it may be more difficult to defend an application for the agreement to be set aside for
non-disclosure of a material matter.

There are several ways to deal with disclosure of each party’s financial position when parties are
negotiating the terms of a financial agreement:

1. If there are proceedings before the court, the parties can rely on their financial statements
and affidavits, and their compliance with their duty of disclosure. This is ideal – provided it is
accurate – as it is open, transparent and on the court record;

2. The parties can provide summaries of their financial positions in the financial agreement,
either in the recitals, in schedules to the agreement or both;

3. The parties can annexe sworn financial statements to the agreement;

4. The parties can provide full mutual disclosure, even if there are no proceedings before the
court. This might include formal valuations of real estate and businesses, or at least market
appraisals of real estate and an accountant’s estimate of the value of businesses;

5. The parties can provide limited mutual disclosure (such as recent tax returns and
assessments, recent financial statements and tax returns of entities and recent
 16

superannuation member statements) and not all other possibly relevant financial documents
(such as bank accounts);

6. The parties can provide no formal disclosure, but include a recital in the agreement that they
waive any right to proper disclosure. This is not ideal for reasons discussed below in relation
to false recitals;

7. The parties can include a recital in the agreement that they have full or sufficient knowledge
of the other party’s affairs to enter into the financial agreement without formal disclosure.
Again, this is not ideal for reasons discussed above.

Whatever approach is taken, it should be clear from the recitals how or if the parties have provided
disclosure.

Financial structures, trusts, companies and tax issues

Particular problems arise when drafting clauses in an agreement to confirm that disclosure has
been provided with respect to financial structures, trusts, companies and tax issues. It may be that,
for example, with respect to financial structures and entities that one party wants existence of
these to be clear on the face of the agreement to support the quarantining of them if the
relationship ends. However a party can’t disclose a non-existent entity and it is difficult to protect
an entity which doesn’t yet exist. A party’s interest in an entity at the end of the relationship may be
different to the interest when the agreement was executed.

If a particular financial structure or entity is sought to be quarantined then it needs to be referred to

precisely, and not just as “the husband’s entities” or “the Marshall group”. The importance of and
difficulties of identification arise because, over time, the way a business operates may change,
particularly where one of the parties is involved in a business with other family members. The
operations of the business may be moved from one entity to another, or a trust may be interposed,
directorships and shareholdings may change and new entities formed.

There is a considerable risk that attempts to quarantine a structure or entity may fail because later
changes mean that the financial structure or entity no longer fits how they were described in the
financial agreement.

In Acker & Acker [2014] FamCA 891, the wife alleged that the agreement was obtained by fraud,
by reason of non-disclosure by the husband of a material matter. He disclosed “what were
described as beneficiary interests in wholly discretionary trusts” (at [10]). The wife contended (at
[10]) that “at all material times the property of the trusts was actually in the whole or at least partial
ownership of the husband”. There is no reported decision as to the outcome. Both parties agreed
that the Family Court dispute could not be determined until a tax dispute was resolved by the
 17

Administrative Appeals Tribunal. The husband in this case probably considered that he had
provided proper disclosure of his interests in the trusts in the financial agreement, but he still
ended up in court after separation with the nature of his interests in dispute.

An option which may be considered is to quarantine the business by description such as “the
husband’s interest in the cheese making business and the entities which operate and own that
business from time to time, currently Cheese Australia Pty Ltd and the Cheese Australia Family
Trust”. Such an approach runs the risk that at the end of the relationship the business may do
other things such as produce other dairy products, have an online store and a cellar door café
which may mean that the business is not quarantined or is only partially quarantined.

The quarantining of superannuation may be problematic in pre-separation agreements (because of

the difficulties of identification of the fund and giving procedural fairness, working out a split,
naming the fund and ensuring the terms are enforceable (s 90XJ FLA).

Self-managed superannuation funds (SMSFs) are an illustration of this. When the agreement is
entered into the parties may, for example, be members of retail funds and later one or both may
move their superannuation to a self-managed superannuation fund. The superannuation which is
quarantined needs to be able to be identifiable and traceable into the new fund. If both parties are
members of a SMSF, which party will retain the fund and which party will rollover their interest into
another fund? What if the parties use the SMSF to purchase a lumpy asset such as the premises
on which a business operates? The agreement needs to be drafted in such a way as to ensure the
party retaining the business has the option of retaining the business premises but the parties may
not know at the time they enter into the agreement they will have an SMSF when they separate
and they can’t predict what assets that SMSF will own and know the respective entitlements of
each member and how a rollover might be achieved.

Drafting an agreement to deal with future potential tax liabilities can also be problematic in pre-
separation agreements. It is impossible to predict if parties or entities will have significant liabilities
and what tax consequences there may be in the future if property is to be transferred. Often the
best that can be done is to advise the client that it is impossible to predict the future and that
possible tax consequences on disposition and transfer should be considered when making
decisions about the acquisition of property.

If the intention of the parties is that the weaker party will not have any tax consequences arising
from the agreement or from their involvement in the stronger party’s entities, then this should be
clear in the agreement, and appropriate indemnities given. There is a risk though that there may
be unintended consequences for one or both parties which cannot be foreseen at the time the
agreement is drafted.
 18

Checking instructions

Mistakes can be made by clients when giving instructions as to their financial positions, so it is
sensible to protect your client by:

 Obtaining ASIC searches of both parties and of any entities;

 Obtaining title searches (including index searches) of real estate of both parties;

 Having the client’s accountant check that the financial position of the client is accurately
described in the financial agreement.

Whilst these steps are almost always done after a separation, such due diligence should also
occur when an agreement is being drafted before a separation.

4. Drafting for clarity and to avoid uncertainty

A financial agreement is a contract. To draft a contract the following questions must be considered
first:

 What is the goal?

 How is it to be done?
 Who is to do it?
 When is it to be done?
 How is it to be enforced if it is not done?

Both the agreement and any letters of advice should be easy for the client to read and understand.
The agreement needs to be enforceable as a contract, not as a set of orders. For this, the clauses
of the agreement should be drafted as a contract and not just copied from orders, as the style is
different. If the terms of the agreement are drafted in the same form as orders they may not be
enforceable and may lack clarity and certainty. Precedent clauses can help with the first draft of an
agreement. The draft must, however, be checked carefully and altered to fit the precise and unique
facts of the particular case.

Care should be taken in using precedent agreements. Justice Collier in J & J [2006] FamCA 442
was critical of the use of precedent agreements without sufficient thought as to whether or not it
was appropriate. He concluded at [34]:

“However I am left in the position of having a very uncomfortable suspicion that the
precedent that has been used has not been properly amended. I am further left unable to
state with any certainty what was actually done and what was actually explained to each
of the parties and the manner in which the document was actually executed and
witnessed.”
 19

In Squibb & Graham [2018] FCCA 1906, the trial judge considered that the agreement had the
hallmarks of having been downloaded from the internet, but it was rectified to refer to the FLA and
to refer to s 90B as being the type of agreement (instead of s 90KA).

Matters to be covered

What clauses should be included in an agreement? As a starting point:

1. What property is excluded?

1.1. Define the excluded property.

1.2. Are there any circumstances where the financially weaker party will receive some of
the otherwise quarantined property?

2. How will other (joint and separate) property be dealt with?

2.1. Who retains the former matrimonial home or will it be sold?

2.2. What if there is no home at the time?

2.3. When will the other party vacate the home?

2.4. How will property be valued?

2.5. The arrangements for any sale.

2.6. How will the net proceeds of sale be distributed?

2.7. How will liabilities be dealt with (including tax)?

3. Will superannuation be split?

3.1. If so, how?

3.2. How will procedural fairness be given?

3.3. Who will retain any self-managed superannuation fund?

3.4. What clauses are required to give effect to this?

3.5. The operative time for a payment split is the beginning of the 4th business day after
the day on which a copy of the agreement is served on the trustee accompanied by
the other documents specified in s 90XI(1).

4. Spousal maintenance

4.1. Is the right to spousal maintenance partially or completely ousted?

4.2. Will one party receive maintenance for a fixed period?

4.3. How will the requirements of s 90E be met?

4.4. Can the requirements of s 90F be met?

 20

5. What contingencies have the parties considered?

6. Recitals – give sufficient background so that the agreement can be understood;

7. Schedule of the parties’ assets and liabilities;

8. Statement of Independent Legal Advice;

9. Separation declaration (if applicable);

10. Should the agreement be a deed

Uncertainty and incompleteness

A contract may be held void for uncertainty or incompleteness if the intention of the parties cannot
be determined objectively. The terms “uncertainty” and “incompleteness” are defined as:

 Uncertainty: The agreement, or an essential term of the agreement, is too vague or ambiguous
for the court to determine the parties’ rights and obligations. The court cannot enforce an
agreement or an essential term which is not definite and clear.

 Incompleteness: The agreement is incomplete because the parties failed to reach agreement
on an essential term. Not everything necessary for the agreement to be implemented has
been agreed.

Uncertainty

Points to note about uncertainty include:

 Courts are reluctant to strike down an agreement which parties intend to be binding. They
endeavour to uphold contracts wherever possible.
 Courts try to objectively ascertain the parties’ intentions.

Clauses and agreements otherwise void for uncertainty may be saved by:

 Applying an external standard such as the standard of reasonableness;

 If the parties have acted on the agreement, their actions may clarify the uncertainty;

 Severing the uncertain part from the contract if it is not important.

 21

Kostres & Kostres (2009) FLC 93-420

The Full Court found that an agreement was void for uncertainty. The agreement was entered into
two days before the marriage. At the time, both parties mistakenly believed that the husband was
an undischarged bankrupt. They did not tell their lawyers this. The parties’ mistaken belief about
the husband’s status led to them acquiring assets in the wife’s name rather than in the parties’ joint
names. Both parties sought that words be “read into” clause 6 of the agreement.

The Full Court was not satisfied that it could read words into the agreement. The agreement was
particularly difficult to interpret as it used terms which were ambiguous or did not reflect the
wording of the FLA, such as "acquired", "assets", "joint funds" and "from their own moneys".

Parke & Parke [2015] FCCA 1692

This case involved two clauses in a financial agreement which created ambiguity and uncertainty.
Pursuant to one clause, the wife’s half interest in a real property was excluded property which she
retained in the event of a separation. However, pursuant to another clause the wife was required to
transfer her 50% share to the parties' son X within 60 days of a separation. A complicating factor
which was not foreseen, at least by the husband when the agreement was entered into, was that X
refused to accept a transfer of the wife’s half interest in the property. The agreement did not have
a default provision setting out what was to occur in the event that X refused to accept the transfer.

The trial judge, Howard J, found that the clauses were essential terms of the agreement because
they dealt with what was to happen in the event that the parties separated and the clauses could
not be severed from the agreement. He set the agreement aside. The husband’s appeal was
discontinued by the husband’s legal personal representative after the husband’s death.

Incompleteness

An agreement is void for incompleteness if the parties failed to reach agreement on an essential
term. An ‘agreement to agree’ is an example of incompleteness. Important points to note about
incompleteness are:

 If it is clear that the parties intended to form a binding contract, the courts may imply an
omitted term into the contract to save it.

 If an agreement provides the formula or machinery necessary to clarify an essential term, the
agreement is not void.
 22

 Tools which are helpful to save contracts from voidness for uncertainty may also be useful to
save contracts from voidness for incompleteness (e.g. if only part of the agreement is
incomplete, it may be severable).

Incompleteness and the limitations of the doctrine of rectification were discussed in Fevia &
Carmel-Fevia (2009) FLC 93-411; [2009] FamCAFC 816, where it was unclear whether an
annexure was part of the agreement. In Fevia, Murphy J quoted from Sindel v Georgiou [1984]
HCA 58; (1984) 154 CLR 661 where the High Court said (at [13]):

“Rectification is a remedy which cures the erroneous expressions of the parties’ true
intentions 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 the
concluded contract.”

Garvey & Jess [2016] FamCA 445

Justice Carew rejected the argument of the wife that the financial agreement was void for
uncertainty as the parties only had an "agreement to agree". The agreement provided that in the
event of a breakdown of the relationship, the parties would "equally divide the joint assets".

Justice Carew said (at [340) in relation to financial agreements generally:

"It is important, in my view, to have regard to the context in which agreements of this kind
are entered into. They are not commercial agreements but arise as a result of a personal
relationship which at the time of making is presumably a happy one. Parties to such
agreements aim to avoid dispute as to how their assets should be divided if their
relationship breaks down at some future time which may be decades away. The future
circumstances of the parties cannot possibly be known at the time of entering into such an
agreement."

She concluded (at [41], [44):

“In my view, the deed is not void for uncertainty because:

a. The deed evinces an intention:

i) to be legally bound;
ii) to oust the jurisdiction of the court pursuant to Part VIII;
iii) to divide the assets in the proportion provided for in the deed.
It is not an ‘agreement to agree’.

b. While the term ‘joint assets shall be equally divided’ is an essential term, it is not
uncertain nor is it incomplete because on the application of the objective test of a
reasonable bystander, the term would be construed to mean that whatever assets they
own jointly when the marriage breaks down are to be divided equally whether in specie
or upon sale;

c. At the time of making the agreement the parties could not possibly have known what
assets they may own at the relevant time and therefore it could not be said that the
failure to allocate a mechanism for implementing the essential term of equally dividing
the joint assets would have caused the husband or the wife to have refused to have
 23

entered into the deed because at that time they could not have known what mechanism
would have been appropriate e.g. it was argued on behalf of the wife that the
agreement should have stated who was to retain which asset or class of asset – in my
view, such a suggestion would prove an impossible task when the nature and value of
assets in the future could not be known at the time of entering into the agreement…

Applying the principles identified above, the term I would imply is to the effect that the
parties will do all things necessary to give effect to the terms of the deed and in the
event of dispute, a court may determine the method of implementing the terms of the
deed. Such a term would be reasonable, would give business efficacy to the deed,
“goes without saying”, is capable of clear expression and does not contradict any
express term of the deed.”

This aspect of the decision was unaffected by the appeal in Jess & Garvey (2018) FLC 93-827.

Plain English

Using plain English is important. Parties should be given what they are paying for: an agreement
and an advice letter that they can read, understand, abide by, refer to at a later date and enforce if
necessary. Old-fashioned legal terms and phrases rarely achieve these objects.

Complicated words and sentence structure may be acceptable in some cases. It will depend upon
the parties. Matters to consider in assessing the complexity of language which is appropriate for
the parties include:

 How old are the parties? Clearer wording and better oral explanations may be required for the
very young and very old.

 What level of education did the parties achieve? Different assumptions may be made about a
party who finished school at 15 as opposed to one who completed a university degree.

 How fluent are they in English: reading, speaking and listening?

 What type of education did they have? A tertiary qualification does not mean that the client
has a good understanding of legal and financial matters. For example, a recent graduate of a
garden landscaping or nursing course may have less understanding of these matters than a
recent accounting graduate.

 What work experience do they have?

 How recent is the work experience?

 What is the health of the parties? For example, is one of the parties suffering from depression,
high blood pressure or a physically debilitating illness?

 Are the parties familiar with legal terms?

 24

 How familiar are the parties with terms used about companies, trusts, financial statements,
tax, a particular business operated by one or both of the parties etc?

Guidelines for writing plain English

Some principles for making documents and letters easier to understand include:

1. Use legal paragraph numbering. This means you might have a paragraph numbered [Link]
rather that 1(a)(i)(A).

2. Avoid large blocks of text. Try to limit the number of lines in a paragraph to five. Qualifying
clauses, exceptions and conditions should be in subparagraphs or separate sentences.
However, it may be clearer to repeat common words to avoid overly long and elaborate
paragraphs.

3. Use short rather than long words.

4. Use short rather than long sentences.

5. Try to balance precision and simplicity, ambiguity and complexity. Vagueness may provide
flexibility but there should still be a method of achieving clarity. This may be by using terms
used in case law or legislation (e.g. “separated under the one roof”, “ordinary course of
business” and “good faith”) or by using a dispute resolution procedure (e.g. value of business
to be determined by an accountant appointed by the President of the Institute of Chartered
Accountants in Australia; a valuation of real estate to be determined by a valuer appointed
by the President of the Australian Institute of Valuers).

6. Use terms used in the FLA where possible, as these terms have case law to support their
meanings and the interpretation of the agreement will be clearer and more certain.

7. Use complex terms sparingly and define them when they are first used. Consider where best
to put the definitions. A list of terms on the first page may discourage further reading but
putting definitions in the body of the agreement may force the reader to search for the
definition.

8. Replace jargon and legalese with short, common words. Do not use old-style or unnecessary
legal words and phrases like “whereas”, “hereinbefore”, “whereof”, “hereinafter”, “herein”,
“aforesaid”, “wherefore”, “said” (as an adjective), “same” (as a pronoun), “and/or”, “provided
that” and Latin phrases. Limit the use of “such... as”. For example, rather than “take such
steps as are appropriate” say “take appropriate steps”.

9. Dates are clearer if the form “12 December 2020” is used rather than “12th December 2020”.
 25

10. Say “must” or “must not” to impose an obligation, not “shall” or “shall not”.

11. Preferably use “if” to introduce a set of facts rather than “where”. “Where” suggests place. If
the event is certain use “when”. For example, rather than “where a party remarries”, use “if a
party remarries”.

12. Avoid superfluous words. For examples of simplified wording, there is a longer table in the
Wolters Kluwer/CCH Australian Family Law & Practice – paragraph 33-510. Some examples
are:

Superfluous term Simpler term Superfluous term Simpler term

in the event that if cease stop
subsequent to after provide give
prior to before request, require ask
despite the fact that although retain keep
not able unable is entitled to, may
has the option of
does not include excludes, omits is required to must

not ... unless, except only if in respect of, about, for

in relation to,
in connection with,
with respect to,
as to, concerning
not ... until only when does not have any force has no force, has no
or effect effect
attained the age of at least 65 years old, in accordance with under
65 years 65 years or over
commence begin/start in consequence of, because of
as a result of
expiration, end is void or of has no effect
termination no effect
for the duration of during notwithstanding the fact despite
that
subsequent later on behalf of, for and on for
behalf of
ascertained in calculated otherwise than except
accordance with
the formula
exceeds is more than pursuant to, under, because of
by virtue of
alter, amend change shall be deemed is taken to be,
to be regarded treated as
any act or thing anything done any act, matter anything
done, step taken, or thing
or decision made
attain reach exclusively only
the provisions of in this agreement mutatis mutandis with appropriate changes
this agreement
utilise use
 26

The above guidelines are in part drawn from the following publications:

 “The Elements of Style” (W Strunk & E B White, 4th edn, Massachusetts, Allyn & Bacon).
 “The Penguin Guide to Plain English” (H Blamires, Penguin 2000).
 “Plain English Manual” (Office of Parliamentary Counsel - [Link]/publications/plain-
english-manual.
 “A Plain English Handbook” (US Securities and Exchange Commission, August 1998 —
obtainable from [Link]/news/extra/[Link]).

Using FLA terminology

Terminology used in the FLA is referred to at point 6 of the Guidelines for Writing Plan English
above. Examples of terms which a court has found difficult to interpret because they were
ambiguous or did not reflect the wording of the FLA are:

 “acquired”, “assets”, “joint funds”, “from their own money”. Kostres (2009) FLC 93-420
discussed above.

 “matrimonial property”. Gibbs & Gibbs [2015] FamCA 630

5. Complex agreements

5.1 Pros and cons

A simple agreement is easier to draft, but it may be too simple to cover all possible contingencies.
To avoid the risk of an agreement being set aside because of one of these contingencies, many
agreements include a recital to confirm that the parties have considered those contingencies. An
example of a recital of drafting for contingencies is:

Before executing this Financial Agreement, each party has had regard to the
possibility that one or both of them may be subject to a change of circumstances
including any or all of:

1. The birth of a child or children or adoption of a child or children;

2. Serious illness or injury of one of the parties or a child;

3. Death of one of the parties;

4. A significant increase or decrease in the value of the property and financial

resources set out in Schedules A, B and C;

5. The bankruptcy of one of the parties.

A formula which gives cascading entitlements with the effluxion of time, the number of children or
some other factor, is more complex to draft and implement than one which gives a fixed outcome.
 27

The reason for including a cascading formula is to more closely match the increased property
entitlements of a party under s 79 (or s 90SM) in longer relationships where there will almost
certainly have been greater contributions (parenting, homemaking, financial and non-financial) of
the financially weaker party to at least partially offset the greater initial financial contribution of the
financially stronger party, in comparison to a short relationship. If the agreement does not
adequately provide for the other party at the end of a long relationship or in the event of one of the
contingencies, then there may be a greater risk of the agreement being set aside or, at the very
least, an application being made with all the associated financial and emotional stress. It may
seem to be less risky to provide for the contingency, but more complex and lengthy agreements
are more likely to have inconsistencies in their drafting and therefore be at greater risk of being set
aside. They are also far more costly to draft and to negotiate the terms.

Simpler agreements set out clearly the respective entitlements of the parties, with perhaps a
payment or transfer of property calculated as a percentage of certain property or a defined lump
sum. If giving a percentage, the property of which the party receives a percentage needs to be
described.

5.2 Maintenance

Sometimes, agreements made before separation are drafted so as to oust the jurisdiction of the
court to deal with property but allow maintenance claims to still be made. Of course, the weaker
party must still establish a need for maintenance, but allowing the weaker party the right to apply
for maintenance may mean that the agreement can be more simply drafted and the agreement is
not as much at risk of being considered a “bad bargain” (and set aside if there are vitiating factors,
such as undue influence), than if the right to apply for spousal maintenance is ousted.

Ousting the right to apply for spousal maintenance may be ineffective in any event. Section 90F(1)
provides that a financial agreement cannot exclude or limit the power of a court to make a
maintenance order if s 90F(1A) applies – which states:

“This subsection applies if the court is satisfied that, when the agreement came into
effect, the circumstances of the party were such that, taking into account the terms and
effect of the agreement, the party was unable to support himself or herself without an
income tested pension, allowance or benefit.”

What then is the relevant time when “the agreement came into effect” for the purposes of
s 90F(1A)? Section 90DA FLA sets out that in relation to s 90B and s 90C financial agreements,
provisions in an agreement dealing with property and financial resources come into effect when a
separation declaration is made.
 28

The ability to make a financial agreement dealing with spousal maintenance is set out in
s 90B(2)(b) and s 90C(2)(b), which are not referred to in s 90DA. Therefore, whether a provision
ousting the right to apply for maintenance is effective is determined at the time the agreement
comes into effect taking into account the terms of the agreement.

In Guild & Stasiuk [2019] FamCA 167 Justice Cronin ordered interim spousal maintenance to be
paid to the wife. The prenuptial agreement purported to oust the jurisdiction of the court to make a
spousal maintenance order in favour of the wife. Justice Cronin found that the requirements of
s 90E were not met. Section 90E states:

“A provision of a financial agreement that relates to the maintenance of a spouse party to

the agreement or a child or children is void unless the provision specifies:
(a) the party, or the child or children, for whose maintenance provision is made; and
(b) the amount provided for, or the value of the portion of the relevant property
attributable to, the maintenance of the party, or of the child or each child, as the case may
be.”

Section 90UF is similarly worded for de facto relationships.

Justice Cronin said (at [29],[30],[32]):

“In my view, the words “the amount provided for” maintenance must refer to an identifiable
quantum. To argue otherwise opens up debate about the extent of that possible quantum.
As s 90E makes any provision void if it does not meet the requirements of the Act, any
uncertainty or vagueness cannot assist the party who seeks the protection of the provisions
of the Act.
… The language of s 90E makes clear that the purpose is to ensure that people cannot
avoid their maintenance obligations each to the other without precise reference to an
amount.”

However, there remains a question as to whether a provision purporting to oust the ability of a
court to make a spousal maintenance order is effective pending a determination as to whether a
financial agreement is binding or should be set aside. The ability to make a spousal maintenance
order is restricted by s 90F(1), and in relation to de facto relationships, by s 90SF(1). In Fosse &
Salvage [2019] FamCA 385, the parties entered into an agreement which excluded the making of
orders under Pt VIIIAB FLA.

Justice Tree made orders in favour of the wife for litigation funding under s 117(1) FLA and interim
periodic spousal maintenance, despite there being an unresolved dispute as to whether the
financial agreement ousted the rights of the wife was binding upon the parties.

Justice Tree distinguished Norton & Locke (2013) FLC 93-567 and Holden & Wolff (2014) FLC 93-
621 in which the Full Court of the Family Court found that unless and until the fact of a de facto
relationship was established, the capacity to make a sole use and occupation injunction or to
 29

require the respondent to file current financial evidence was limited. He followed Rakete & Rakete
[2012] FamCA 267 where litigation funding orders were made in favour of parties seeking to
impugn a financial agreement. In both cases s 71A was not seen as a bar to a litigation funding
order. Section 71A states:

(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 s 4(1).

In Fosse & Salvage the husband raised another argument, namely that unless and until the
agreement was set aside it must be presumed to be legally binding on the parties. Clause 19 of
the agreement was an absolute bar to the wife making a claim. Clause 19 stated:

“Pleading this Agreement as a Bar

Mr Salvage and Ms Fosse agree and acknowledge the terms of this deed may be pleaded
as an absolute bar and estoppel to further proceedings, commenced now or taken at any
time in the future.”

Justice Tree rejected the proposition that clause 19 could be read so as to preclude proceedings
seeking to impugn the cohabitation agreement, or act as an estoppel or bar in relation to any claim
against the significant property or financial resources of the husband. He was not satisfied that by
invoking her right to seek an order under s 117 FLA, the wife was thereby making “any further
claim” in relation to property, but rather is seeking an order for costs in relation to proceedings
antecedent to making a potential claim against property.
In Salvage & Fosse (2020) FLC 93-966 the Full Court of the Family Court heard an appeal by the
husband against orders made in favour of the wife for litigation funding of $100,000 and interim
spousal maintenance of $516.05 per week. As they were interim orders the husband needed to
seek leave to appeal. Justice Watts refused leave to appeal both orders. Justices Ryan and
Aldridge granted leave to appeal the litigation funding order and allowed the appeal.

The Full Court held that a provision that no maintenance be payable did not come into effect until
the relationship had broken down. The bar in the agreement to applying for spousal maintenance
was of no force and effect if the wife could establish that at the time of the breakdown of the
relationship, she was unable to support herself without an income-tested pension, allowance or
benefit.

The husband argued that the wife had not established that she was unable to support herself
adequately without a means tested pension as she had reasonable health and had not put
 30

evidence of her attempts to obtain employment. The Full Court referred to relevant matters
highlighted by the trial judge:

a. the respondent was aged 71

b. the respondent had retired from employment at the age of 65
c. at the time of the hearing the respondent had net assets of approximately $6,800
d. the respondent had commenced receiving an income-tested Centrelink pension when
she was approximately 64 or 65
e. in 2015 the appellant commenced paying the respondent approximately $1,000 per
month to assist in supporting her, and
f. held that it was open to the trial judge to conclude at the time the cohabitation
agreement came into effect, the wife was unable to support herself without pension,
allowance or benefit and accordingly, s 90UI was enlivened.
The cohabitation agreement included a clause that “[n]either will be required to pay maintenance
to the other”. Although the challenge to the approach to s 90UI FLA was abandoned, all three
judges felt obliged to be satisfied that s 90UI did not operate to bar the wife’s claim for interim
spousal maintenance. The agreement stated that it operated from three months after the parties
ceased to cohabit. However, the FLA determined when the Part VIIIAB agreement and its specific
clauses came into effect.

Under the FLA, the provisions of a financial agreement in relation to the breakdown of a de facto
relationship can only come into effect on the breakdown of a de facto relationship. They cannot
take effect from an earlier date even if the agreement states this.

Justice Watts, with whom Ryan and Aldridge JJ agreed on this point, said (at [145]–[147]):
“Section 90SE of the Act provides that a court may make such order as it considers proper
for the maintenance of one of the parties to a de facto relationship “after the breakdown of
the de facto relationship”. This is important because, as indicated, s 90UI is designed to
protect the revenue by not allowing a cohabitation agreement to limit a de facto spouse’s
ability to make a maintenance application if she/he otherwise requires an income tested
pension, allowance or benefit to support themselves. It follows that it would defeat the
purpose of s 90UI to interpret the words “when the agreement came into effect” as meaning
the date of the signing of the s 90UC agreement, when no application for spousal
maintenance could be made at that time.
For the sake of completeness, I note:
a) section 90UG provides that provisions in a Pt VIIIAB financial agreement that are
incidental or ancillary to, inter alia, maintenance are of no force or effect unless and
until the de facto relationship breaks down; and
b) that s 90UF(1) of the Act provides that a provision in a Part VIIIAB financial
agreement (which the Cohabitation Agreement in this case is taken to be), so far as
it relates to property or financial resources but not maintenance are of no force and
effect until a separation declaration is made. A declaration must state the parties
have separated and are living separately and apart at the time the declaration is
made.
 31

The primary judge was clearly correct in finding that s 90UI of the Act was engaged and that
the respondent could rely upon it, if she could establish at the time of the breakdown of the
relationship, she was unable to support herself without an income tested pension, allowance
or benefit.”

Including a right to seek maintenance may help establish that the parties did consider possible
contingencies, such as childbirth, care of children, injury and ill-health, which might otherwise be
relied upon in an application to seek that a financial agreement be set aside, particularly under
s 90K(1)(d). In this case, the agreement may be more likely to be upheld than if the agreement
merely states these possibilities in a recital.

The uncertainty around whether a maintenance claim may be able to be sustained by, for
example, a financially weaker spouse with the primary care of the children who is in employment,
may mean that more consideration should be given to ensuring that the weaker party is left with a
greater share of the property than otherwise, so that there is less motivation to attack the
agreement.

5.3 Termination and sunset clauses

Instead of completely quarantining initial contributions, it may be preferable to quarantine them for
a short period only or until the birth of a child. This is known as a “sunset clause”. Section 90J(1)
states:

“(1) The parties to a financial agreement may terminate the agreement only by:
(a) including a provision to that effect in another financial agreement as
mentioned in subsection 90B(4), 90C(4) or 90D(4); or
(b) making a written agreement (a termination agreement ) to that effect.”

For the sunset clause to be effective, the agreement must be drafted as both a financial agreement
and a termination agreement and the requirements of s 90J(1) as well as s 90G(1) must be
complied with including the advice requirement. If the s 90J(1) requirements are not met, a
requirement that the parties review an agreement if they have a child is almost certainly
unenforceable if the intention is that the parties are forced to enter into a new agreement in
different terms. Such a clause may only be used to encourage parties to re-negotiate an
agreement, not force them to do so.

Westacott & Dunwoody (No 2) [2019] FamCA 719 is one of the few cases which deals with
termination agreements. The termination agreement sought to set aside a financial agreement the
parties entered in 2005 but made no reference to any proposal for further property settlement
arrangements between the parties. Justice Foster held that although there were no statements of
independent legal advice it was unjust and inequitable if the agreement was not held to be binding.
After signing the termination agreement, the parties lodged an Application for Consent Orders,
 32

including an order that the termination be declared binding and enforceable. Attached to the
application was a certificate of independent legal advice by the wife, and a statement by the
husband acknowledging that although he did not obtain independent legal advice he was aware of
his right to do so. Justice Foster found that both parties acted inconsistently with the 2005 financial
agreement. It was declared that the termination agreement was binding.

In the alternative to a sunset clause, the agreement can, by stages or steps, reduce the amount of
protection given to initial contributions and increase the entitlements of the party who made less
initial contributions. The main difficulty with staged entitlements (as discussed above) is that these
agreements are more complex, and therefore costly, to negotiate, draft, interpret and implement.

Another option is to leave open the ability of the parties to apply for spousal maintenance. By not
ousting the jurisdiction of the court to make periodic or lump sum spousal maintenance orders, the
court is left with the ability to address the different circumstances of parties after separation and
take account of their different needs with periodic spousal maintenance orders, lump sum spousal
maintenance orders or both. The weaker party may be able to obtain lump sum maintenance
based on needs, which is likely to be less than a property adjustment which will also take into
account contributions.

Whether or not seeking to protect the whole value of an item of property or part of it, definitions are
important. The agreement needs to be clear as to the property which is being protected. Is it:

1. The dollar value of the property at the date of the agreement? This means the property is still
protected even if it is converted to another asset or mixed with other property. However, over
a period of time the real value of the protected property will diminish.

2. The property itself, on the assumption that it will not be sold or transferred? If it is sold the
protection is lost. Any contributions by the other party, direct or indirect, are ignored. This
may result in a particularly unfair outcome to the other party if there is little other property or
if significant contributions have been made by the other party to the item of property.

3. The property itself, but where if it is sold the property’s value can be traced into other
property either as a dollar value or as a percentage?

4. Another formula?

6. Drafting to demonstrate fairness in the terms – dealing with the test for “bad bargain”

Since Thorne v Kennedy there is more concern among legal practitioners that financial
agreements should not result in a “bad bargain” for one of the parties. There is, of course, no
requirement that the terms of a financial agreement be “just and equitable”, “proper” and
 33

“appropriate” as s 79 orders must be. It is rarely the case that both parties will be advantaged by
the agreement. One party is almost always disadvantaged by the agreement.

However, if an agreement gives the weaker party entitlements which are close to the range of their
entitlements under s 79, then that party is less likely to seek to set aside the agreement and less
likely to succeed in an action to set it aside.

What is a bad bargain?

There are several cases which reject the proposition that a “bad bargain” is a relevant
consideration in determining whether an agreement is binding or should be set aside. For
example, in Fewster & Drake [2016] FamCAFC 214; (2016) FLC 93-745, the Full Court was
looking at s 90K(1)(d) and said (at [65]):

“It is to be recalled that, subject to compliance with the statutory requirements, people
are free to enter such binding financial agreements as they see fit. There is no
statutory provision which enables a binding financial agreement to be set aside
merely because it is unfair: Hoult & Hoult [2013] FamCAFC 109; (2013) FLC 93-546
at 87,283 and 87,296 - 87,298.”

In relation to the hardship required by s 90K(1)(d), the Full Court said that s 90K(1)(d) required (at
[68]):

“something more than unfairness. In In the Marriage of Whitford [1979] FamCA 3;

(1979) FLC 90-612 (“Whitford”) at 78,144-78,145 the Court said that hardship is:

...akin to such concepts as hardness, severity, privation, that which is hard to

bear or a substantial detriment...
...
In ordinary parlance, hardship means something more burdensome than “any
appreciable detriment'”. We consider that in subsec. 44(4) the word should have
its usual, though not necessarily its most stringent, connotations.”

In Higgins & Moruba [2018] FamCA 467, Thornton J said (at [80]):

“The Court in Fewster & Drake made it clear … that individuals are free to enter into
binding financial agreements as they see fit and there is no statutory provision which
enables one to be set aside merely because it is unfair. The wife’s argument, that
there is hardship because she would obtain a different outcome under a s 79
application under the Act compared to the binding financial agreement is therefore not
relevant to the Court’s consideration of whether there is hardship. Therefore, the
order the wife seeks for full disclosure is not justified on this basis.”

More recently, in Beroni & Corelli (2020) FLC 94-004 the Full Court of the Family Court considered
an appeal against findings by the trial judge that an agreement should be set aside for undue
influence and unconscionability. The agreement provided that regardless of the length of the
parties’ relationship, the wife had no financial recourse if it came to an end.
 34

The trial judge described the terms of the agreement as “manifestly unfair”, “simply outrageous”
and “stark improvidence”. These were not the entire basis upon which there was found to be
undue influence and unconscionable conduct such that the agreement should be set aside. The
Full Court said (at [75]) that “the degree of the perceived unfairness of the BFA’s terms was only
one factor amongst the many factors taken into account”.

The Full Court agreed with the wife (at [74]) that:

“An unfair, disadvantageous or improvident transaction can be a necessary, albeit not

sufficient, element of a transaction liable to be set aside due to viciating factors”.

A finding that an agreement is a bad bargain will not be made in isolation of a vitiating factor, such
as fraud, undue influence or unconscionable conduct. Therefore, in drafting, negotiating and
executing an agreement it is important that legal practitioners and their clients avoid falling foul of
vitiating factors. For example, it is strongly recommended that lawyers ensure that there is a trail of
correspondence between lawyers negotiating the terms of the agreement, that the stronger party
does not advocate “sign this agreement or there will be no marriage” and that there is ample time
for the terms of the agreement to be considered before the wedding.

7. The problem of false recitals

Recitals are statements at the beginning of a contract which set out preliminary matters, such as
factual background and the reasons for the contract.

The false recitals which are most commonly problematic include:

1. Recitals which set out the financial positions of the parties or refer to schedules which may
not accurately set out the true position. If parties provide full details of their financial
positions, then if there are any errors it may be easier for the other party to successfully
apply to set aside under s 90K(1)(a) or 90UM(1)(a) because “the agreement was obtained by
fraud” (including non-disclosure of a material matter). However, if the parties do not provide
full details of their financial positions in the agreement, it may be more difficult to defend an
application for the agreement to be set aside for non-disclosure of a material matter.

2. Recitals which state that a party is able to support themselves without an income-tested
benefit. In Thorne v Kennedy, the agreement included an “acknowledgement” that the wife
was able to support herself without an income tested pension, allowance or benefit, taking
into account the terms and effect of the agreement when the agreement came into effect.
This statement was designed to ensure that the agreement, in compliance with s 90F, ousted
the jurisdiction of the court to make an order for spousal maintenance.
 35

As the plurality in the High Court said, this statement was made (at [20]) despite the wife’s
“extremely limited personal means”. The plurality made no findings on whether the s 90F
declaration was effective, as submissions were not made with respect to it – either in the Full
Court of the Family Court or in the High Court – but the plurality appeared to express doubt
as to whether the wife was bound by her “acknowledgement”. The High Court drew the
attention of the parties to the issue, but because of the way the case was presented it was
significant only (at [20]) “as a matter of contextual construction”, which suggests that the
incorrect statement may have assisted the plurality to reach the conclusions it made that
there had been undue influence and unconscionable conduct.

3. Recitals which indicate that there has been a mutual exchange of disclosure when this has
not occurred, or state that there has been a mutual waiver of disclosure. This is particularly
the case where the parties have unequal bargaining power, it may be easier for the court to
find that there was undue influence or unconscionable conduct.

8. Drafting to demonstrate no disadvantage or duress – is this a relevant consideration?

Recitals or clauses confirming that neither party has been subject to duress, undue influence or
unconscionable conduct are often included in financial agreements. The problems with these
clauses include:

 They are technical terms and even with the benefit of legal advice a party may not know what
they mean;

 Duress, undue influence or unconscionable conduct may still be established from the
surrounding circumstances.

A better approach is to try to remove the possibility of these vitiating factors being established from
the circumstances in which the parties negotiated and entered into the agreement. From Thorne v
Kennedy we know that an agreement is more likely to be upheld if:

 There were negotiations between the parties rather than one party being told to sign the first
version. Therefore, it is vital that there is a paper trail to prove that there were negotiations;

 The negotiated changes are substantive, or at least not just correcting minor drafting errors;

 There was time for “careful reflection”. The time required will vary depending upon the literacy,
education and other circumstances of the weaker party. A recital can be included in the
agreement setting out the period during which the terms of the agreement were negotiated.
Again, a paper trail of this is important;
 36

 The agreement and any advice was able to be understood by the weaker party. If an
interpreter is needed, one should be used;

 The terms of the agreement were negotiated between lawyers rather than though the parties.

9. Drafting lessons from Thorne v Kennedy

Following the High Court judgment in Thorne v Kennedy, whilst there are many uncertainties, there
are some lessons for drafting financial agreements:

1. The High Court listed six factors (which were not intended to be exclusive) which are
prominent in assessing whether there has been undue influence in the particular context of
pre-nuptial and post-nuptial agreements. They need to be considered when taking
instructions, negotiating, drafting and advising on financial agreements. They are repeated
here because of their importance:

1.1. Whether the agreement was offered on a basis that it was not subject to negotiation;

1.2. The emotional circumstances in which the agreement was entered including any
explicit or implicit threat to end a marriage or to end an engagement;

1.3. Whether there was any time for careful reflection;

1.4. The nature of the parties' relationship;

1.5. The relative financial positions of the parties; and

1.6. The independent advice that was received and whether there was time to reflect on
that advice.

2. An agreement which is fair and reasonable, perhaps close to a party's s 79 entitlements, is

more likely to be upheld.

3. Ensure there is mutual disclosure.

10. Other drafting tips

The following checklist is not intended to be comprehensive, but lists a few tips to make sure that
that things don’t go wrong:

1. Check the names of the parties are correct.

2. Check the section of the FLA under which the agreement is made is correct, e.g. s 90B or
s 90C. The parties’ circumstances may have changed since the first draft.

3. Read that section of the FLA and check that the agreement covers matters which can be
covered in that type of agreement.
 37

4. How will the parties provide disclosure? See Part 3 of this paper.

5. If there is a list of assets and liabilities, it may need to be reviewed and updated if the drafting
and execution of the agreement takes some time.

6. Have detailed and contemporaneous file notes of conferences, including the times the
conferences started and ended and who was present.

7. Give the client a letter of advice about the final version of the agreement a few days before
the agreement is signed.

8. Update the advice if amendments are made to the agreement, making sure that the advice is
given in relation to the final version of the agreement, as a whole, not just the amendments.

9. Don’t include general statements in the agreement which are not true – e.g. mutual
disclosure has occurred, party able to support themselves without Centrelink.

10. Follow s 90G(1) (s 90UJ(1)). Look at the wording of this section before your client comes into
the office to sign the agreement, when you write to the other lawyer and before you close the
file. Create a checklist and keep it on the file.

11. Avoid, if possible, provisions relating to superannuation in agreements entered into before
separation, as the s 90XJ(1) requirements may not be met.

12. Post-separation, finalising a property settlement in court orders is almost always preferable.
A financial agreement ousting the jurisdiction of the court to deal with spousal maintenance
may be a useful adjunct.

13. Property acquired after the end of a de facto relationship or after a divorce cannot be dealt
with in a financial agreement.

14. If there are spousal maintenance provisions, ensure you have complied with s 90E or 90UH
and s 90F or 90UI.

15. If it is a Pt VIIIAB financial agreement, make sure there is a de facto relationship in existence
or that one will exist. If it is a s 90B agreement, there needs to be a marriage before the
agreement can be effective. Do you need both a s 90B and s 90UC agreement? Will you do
a combined agreement or separate ones? See Piper & Mueller (2015) FLC 93-686.

16. Check for uncertainties, inconsistencies and incompleteness in drafting. Use terms which are
in the FLA.

17. Have another senior lawyer read the agreement.

 38

18. Have you covered all the assets and potential assets?

19. Have you read the most recent cases on financial agreements, particularly of the Full Court
of the Family Court and the High Court?

20. Are there potential claims in overseas jurisdictions now or later?

21. If the parties may have children, then provide for this.

Conclusion

Drafting financial agreements which are truly binding is not an easy task. The longer and more
complex the agreement, the more that can go wrong. It is important to check the legislation
carefully and use terms which are clear and defined, preferably terms which are used in the FLA or
other legislation and case law.

Thorne v Kennedy has not changed the fact that agreements which follow the wording of the FLA,
and give the weaker party enough so it is not a “bad bargain”, are more likely to be binding and not
set aside. One party will always be disadvantaged by the agreement, but Thorne v Kennedy
alerted lawyers to the fact that a bad bargain may be an indication of a vitiating factor.

© Copyright - Jacqueline Campbell of Forte Family Lawyers and Wolters Kluwer/CCH. This paper uses some material written for
publication in Wolters Kluwer/CCH Australian Family