Husband Sues Lawyers Over Invalid Cohabitation Agreement
A husband is suing his lawyers because his cohabitation agreement was not validly executed. The Family Court ordered that his former de facto wife was entitled to retain the husband’s Porsche with a personalised number plate, his cemetery plot, and $900,000 cash. His lawyers’ defence is reminiscent of Sergeant Schultz’s famous words from the television show Hogan’s Heroes – “I know nothing.”
The Supreme Court Proceedings
In Supreme Court proceedings, which have not yet been determined, the husband claims that his lawyers and his wife’s lawyers – who both deny the allegations – failed in their duty of care to him and were responsible for the cohabitation agreement being thrown out by the Family Court, which ultimately caused him financial losses.
The Agreement and Its Execution
In August 2005, the agreement was signed and witnessed by the parties’ cleaning lady, not a justice of the peace or a qualified solicitor as required by the legislation governing cohabitation agreements in Queensland at the time. The husband also claimed his lawyers were liable for his losses because they failed to inform him of the need to make “full and frank disclosure of current assets” and the need to obtain legal advice before the agreement was signed.
The Court’s Ruling on the Agreement
The husband stated that the couple separated in early 2010. In September 2011, a court declined to recognise the cohabitation agreement as a binding, legal document. The court ordered the husband to pay the wife $900,000 and transfer the cemetery plot and his Porsche 911 to her. He suffered financial losses amounting to nearly $1.5 million, including legal fees.
The Defence of the Husband’s Lawyers
In their Defence, the husband’s lawyers argued that they did not practise in family law and that the onus was on the wife’s lawyers – who had family law expertise – to provide sound advice regarding the agreement. They contended that the husband and the wife’s lawyers were aware of their lack of expertise and that they exercised all “skill and reasonable care” possible given their limited knowledge.
The Wife’s Lawyers’ Response
The wife’s lawyers also denied any liability for the husband’s loss, claiming they owed no duty of care to him whatsoever.
The Family Court Case
The family law proceedings were reported as Kevin & Trembath. In those proceedings, the agreement was declared to be:
- Not a recognised agreement within the meaning of s 266 of the Property Law Act 1974 (Qld);
- Not taken to be a Pt VIIIAB Family Law Act 1975 financial agreement;
- Not a binding financial agreement under the Family Law Act.
The Relevant Legislation
Section 266 of the Property Law Act 1974 (Qld) sets specific requirements for a cohabitation agreement to be recognised, including proper witnessing and disclosure of financial details.
Queensland referred its powers regarding property division in de facto relationships to the Commonwealth from 1 March 2009. The Family Law Act recognises certain agreements made prior to that date.
The Trial Judge’s Decision
Murphy J ruled that the agreement did not fall under the Family Law Act and did not prevent the Family Court from exercising its powers. The court found that the agreement was not properly witnessed and therefore did not meet the legislative requirements.
The Defences of the Law Firms
The defence of the husband’s lawyers is relatively novel, as it relies on their admitted lack of family law expertise. They argue that they and the husband relied on the expertise of the wife’s lawyers.
This defence is reminiscent of Sergeant Schultz’s phrase from Hogan’s Heroes – “I hear nothing, I see nothing, I know nothing.”
What Next?
Although the agreement purported to be a “State” agreement, its outcome will have implications for legal professionals involved in drafting and executing financial agreements under the Family Law Act.
If the “Sergeant Schultz defence” succeeds, it could challenge the notion that lawyers should only practise in areas in which they have expertise. However, if the husband is successful, it will highlight the risks for lawyers practising outside their areas of expertise.