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Jacky Campbell, November 2015

Opposing the enforcement of a financial agreement – a second bite of the cherry?

There have been few reported cases with respect to the enforcement of financial agreements. Recently, the Family Court had to decide whether having previously refused to set aside a financial agreement or make a declaration that it was not binding, it could exercise its discretion not to enforce the agreement.

In Fan & Lok[1] the wife’s estate sought to enforce a financial agreement. In earlier proceedings, The Estate of the late Ms Fan & Lok[2], the husband was unsuccessful in his applications to either have the agreement set aside or have it found not to be binding. The two decisions raise the question of the distinction between seeking that an agreement be set aside or declared not to be binding and an application opposing its enforcement. This arises particularly where there is a determination in the earlier proceedings that it would be unjust and inequitable for the agreement not to be binding.

Enforcement under the Family Law Act 1975

The power of the court to enforce orders is discretionary rather than absolute, and the husband in Fan & Lok sought that the court exercise its discretion in his favour. This principle was established by the Full Court of the Family Court in such cases as Ramsay & Ramsay[3]. Various cases have considered whether it was inequitable to enforce s 79 orders, primarily because of the conduct of the parties in the intervening period. For useful recent discussions on the law see Yilmaz & Yilmaz[4] and Barrington & Downto.[5]

In Yilmaz, the res judicata principle was in issue, as it was in the second Fan & Lok case. Le Poer Trench J referred to Kerr & Kerr[6] in which Nygh J confirmed that enforcement will be refused if it is inconsistent with an agreement or estoppel binding on the party seeking enforcement. In Kerr the orders provided for a sale of the former matrimonial home and for the proceeds of sale to be divided equally. After the orders were made, the husband proposed that he purchase the wife’s interest in the home from the wife. The wife agreed and this informal agreement was implemented. Fresh orders were not made. The wife later sought enforcement of the order for sale. Nygh J held that the wife was estopped from asserting that the orders were still operative and, in addition, by reason of her conduct and her delay in seeking enforcement, that it was inequitable for Nygh J to exercise his discretion to enforce the orders.

Le Poer Trench J in Yilmaz also referred favourably to Riethmuller FM (as he then was) in Watson & Watson[7]. Riethmuller J said:

“I am satisfied that the discretion needs to be founded on conduct or events that occurred after the orders were made (for conduct prior to the order the appropriate course is to apply under s 79A). As a result, delay may be the basis for the exercise of the discretion, analogous to laches being a basis for not exercising the discretion to grant equitable relief. However, delay, of itself, would rarely be sufficient, particularly if the delay is less than the limitation period for enforcement of judgments generally in the jurisdiction”.[8]

The powers of the Family Law Courts with respect to the enforcement of financial agreements are set out in s 90KA Family Law Act 1975. The principles of law and equity applicable to determining the enforceability of contracts and purported contracts are relevant. The court:

(a) Has the same powers, may grant the same remedies, and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction.[9]

(b) Has the power to make an order for the payment of interest;[10]

(c) May order that the agreement or a specified part of the agreement, be enforced as if it were an order of the court.[11]

Although not discussed in Fan & Lok, the court is directed by s 90G(2) and 90UJ(4) that it “may make such orders for the enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary”, reinforcing the discretionary nature of enforcement.

A party seeking to enforce an agreement in the Family Court must, in accordance with r 20.02 obtain an order under s 90KA(c) or s 90UN(c). Rule 25B.08 of the Federal Circuit Rules applies with respect to applications in the Federal Circuit Court and is similarly worded.

Fan & Lok – The setting aside proceedings

In The Estate of the late Ms Fan & Lok,[12] a pre-nuptial financial agreement (under s 90B) provided that in the event of separation a property at suburb C was to be sold and the proceeds used to discharge a mortgage for which one of the security properties was a property in the name of the wife. The wife died shortly after separation. The husband arranged for the suburb C property to be transferred into his sole ownership by right of survivorship.

The applicant was the executrix of the wife’s estate and was one of the wife’s children. She sought orders to enforce the agreement. Under the agreement, in the event of a separation, a jointly owned property at suburb F was to be sold and the proceeds used to reduce the mortgage. If the proceeds of the sale of that property were less than $253,000, the husband and the wife were equally liable for the shortfall up to $253,000. The husband was liable for the balance of the mortgage debt, if any. The suburb F property was sold, but the proceeds were insufficient to discharge the mortgage debt in full. The bank issued a demand for payment.

The husband sought to set the agreement aside. He unsuccessfully argued that either the agreement was impracticable to be carried out or that there had been a material change in circumstances.

The husband also argued that the agreement was not binding as he had not received the requisite legal advice required by s 90G(1)(b). The certificates of advice set out that the parties received advice in relation to a s 90B agreement when in fact it was a s 90C agreement. Rees J did not deal with the argument that the agreement may have still been valid[13], but exercised her discretion under s 90G(1A)(c) and made a declaration that it would be unjust and inequitable if the agreement was not binding on the husband.

Fan & Lok – The enforcement proceedings

In Fan & Lok[14], the husband sought that the application for enforcement be dismissed. He submitted that the court should exercise its wide discretion and find that it was not just and equitable to enforce the financial agreement by requiring him to sell his property at suburb C as the agreement envisaged that he would retain that property.

Rees J noted that the contention made by the husband, that it was not just and equitable to enforce the terms of the agreement, was the subject matter of the determination she had made in the earlier proceedings. She found “… that res judicata estoppel arises in relation to the submission that it is not just and equitable to enforce the agreement”.[15]

In case she was wrong about issue estoppel, Rees J dealt with the husband’s other arguments, which were:

    • There were inconsistencies in the agreement which had the effect that the agreement could not be given the construction for which the wife’s estate contended;
    • If the agreement were enforced, the husband would be left in a financially precarious position;
    • The husband was entitled to rely on the fact that the wife had a life insurance policy, which he said was taken out to discharge the mortgage in the event of her death;
    • Amounts drawn from the mortgage during the marriage were used for the benefit of the wife’s children;
    • Laches; and
    • The husband made payments both before and after the wife’s death for her benefit and that of her children.

Rees J dismissed these arguments and found that she could enforce the agreement. She considered that an order which provided for the sale of the suburb C property, in the event that the husband failed to comply with his obligation to pay the amount owing under the mortgage, was available to the court in the exercise of its wide powers pursuant to s 90KA. If she was wrong about this, she was also satisfied that the court had an inherent power, as stated by the Full Court of the Family Court in Molier & Van Wyk[16], to impose consequential provisions for the sale of the suburb C property to ensure that the orders made requiring the husband to discharge the mortgage were carried into effect.

In addition, Rees J relied on r 20.05(a) of the Family Law Rules 2004 which expressly provides that the court may make an enforcement order, in relation to an obligation to pay money, for the seizure and sale of real property.

Conclusion

Under the Family Law Act the Family Law Courts have a wide discretion not to enforce orders and this discretion extends to the enforcement of a financial agreement by virtue of s 90KA(c).

The possibility of opposing the enforcement of a financial agreement as an alternative to or in addition to applying to set it aside or have it declared not to be binding was considered in the Fan & Lok cases. The husband’s application to oppose the enforcement of the agreement was unsuccessful, in part because the trial judge considered herself bound by her earlier decision in which she found that it would be unjust and inequitable if the husband was not held to his agreement.

It may, however, be possible, on a different set of facts, to distinguish between a declaration that it was unjust and inequitable not to hold a party to an agreement and the broad discretion to enforce.

[1]    [2015] FamCA 816

[2]    [2015] FamCA 300

[3]    (1983) FLC 91-301

[4]    [2014] FamCA 663

[5]    [2015] FamCA 46

[6]    (1983) FLC 91-329

[7]    [2006] FMCAfam 293

[8]    at para 32

[9]    s 90KA(a)

[10]    s 90KA(b)

[11]    s 90KA(c)

[12]    [2015] FamCA 300

[13]    e.g. Wallace & Stelzer (2013) FLC 93-566

[14]    [2015] FamCA 816

[15]    (at para 22)

[16]    (1980) FLC 90-911

Jacky Campbell

Partner

University qualifications

Master of Laws, Monash University

Bachelor of Laws, Monash University

Bachelor of Arts, Monash University

Graduate Diploma of Professional Writing, Deakin University

Other qualifications
Accredited Family Law Specialist,
Law Institute of Victoria

Email Jacky Campbell
jcampbell@fortefamilylawyers.com.au

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Publications
To read Jacky Campbell’s articles and papers click here.

In 2020, Jacky was recognised as a leading family lawyer in Melbourne by Doyle’s Guide to the Australian Legal Market as well as one of Melbourne’s leading family lawyers in High-value and Complex Property matters, and a recommended lawyer in parenting matters. Jacky was also a recommended lawyer in the Doyle’s leading family and divorce lawyers in Australia. Jacky writes extensively on complex aspects of family law and her up-to-date knowledge means that she is able to provide accurate information about the law. She combines this with offering strategic advice to clients and guidance as to the best approach to take in their particular circumstances.

Jacky wrote her Masters thesis on the relationship of bankruptcy and family law. She continues to have a special interest in matters involving bankruptcy, insolvency, liquidation and receivership.

Jacky received the Law Institute of Victoria Rogers Legal Writing Award 2004—for the article “Splitting the Super…and Selling the Home”. She is experienced with complex superannuation interests such as defined benefit funds and self managed superannuation funds.

Jacky is the consultant editor of Wolters Kluwer/CCH Australian Family Law and Practice and contributing author to Wolters Kluwer/CCH Australian Family Law and Practice to the Property, Spousal Maintenance, Financial Agreements, Maintenance Agreements, Procedure and Precedents tabs. She writes several chapters of the Wolters/Kluwer CCH Australian Master Family Law Guide, and is the author of the family law chapters in the Thomson-Reuters Australian Financial Planning Handbook and in the CCH Australian Master Superannuation Guide.

Jacky is a Fellow of the International Academy of Family Lawyers, a board member of the Asia Pacific Chapter of that Academy, and an Associate of the American Bar Association. She acts for many clients who are overseas or where there is an international element such as overseas assets and international child abduction under the Hague Convention. She is also experienced in Australian and overseas surrogacy arrangements and in disputes about the role of a sperm donor. She is a member of the Maintenance and Property Committee of the Family Law Section of the Law Institute of Victoria, the Family Law Section of the Law Council of Australia and Victorian Women Lawyers.

Jacky is keen to assist clients to resolve matters before trial through alternative dispute resolution processes including mediation. She is a trained arbitrator and is an arbitrator with The Alternative Courtroom.

Wendy Kayler-Thomson

PARTNER

University qualifications

Master of Laws, Monash University

Bachelor of Laws, University of Melbourne

Bachelor of Commerce, University of Melbourne

Other qualifications
Accredited Family Law Specialist, Law Institute of Victoria

Email Wendy Kayler-Thomson
wkaylerthomson@fortefamilylawyers.com.au

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Wendy Kayler-Thomson is a partner of Forte Family Lawyers and has practised as a lawyer specialising in family law for more than 25 years. Wendy is recognised as one of Melbourne’s leading family lawyers in Doyle’s 2020 Guide to the Australian Legal Market.

Wendy is the Immediate Past Chair of the Family Law Section of the Law Council of Australia, the peak body for Australian family lawyers, and has been a member of the Executive of the Family Law Section for more than 10 years. The Family Law Section is regularly consulted by the Federal government and the Courts about changes to family law and court procedures. As a result, Wendy is able to offer her clients the most up to date advice on family law and strategies to take advantage of future changes.

Wendy’s time as Chair of the Family Law Section (from 2016 to 2018) coincided with a period of great controversy and unprecedented attention on the reform of family law and the family law system. This included the Victorian Royal Commission into family violence, the Federal Parliamentary enquiry into the family law system and family violence, the Australian Law Reform Commission’s Family Law Review and the Federal Government’s proposal to restructure the Family Court and Federal Circuit Court.

Wendy was a member of the Advisory Committee to the Australian Law Reform Commission’s Family Law Review, the most comprehensive review of family law and the family law sector in 40 years.

Wendy was also a member of the Advisory Committee to the Law Council of Australia’s 2018 Justice Project, chaired by former High Court of Australia Chief Justice, the Hon. Robert French. The Justice Project is one of the most comprehensive, national reviews into the state of access to justice in Australia in the past 40 years.

Wendy develops close and trusted relationships with her clients and the wide network of professionals that refer her work. Wendy’s approach is tailored to each individual client’s needs, recognising that for most people, the breakdown of a relationship is one of their most stressful and challenging experiences. Wendy brings a high attention to detail, strategic advice and a depth of expert knowledge about family law. Wendy has a commercial background and has acted for many clients with complex financial arrangements. She works closely with her clients’ accountants and other professional advisors to ensure that all the complexities of those arrangements, including tax impacts and restructuring, are dealt with as part of any settlement.

Wendy has undertaken extensive training in a wide range of social sciences that impact on families and their children, including family and domestic violence, parental alienation, personality disorders, drug and alcohol addiction and high conflict. Wendy’s clients benefit from her knowledge of the most up to date approaches by child psychologists and other experts to managing the post-separation care arrangements of children. Wendy has particular expertise in cases where one parent wants to relocate with the children interstate or overseas.

Wendy is also a member of the Executive Committee of the Family Law Section of the Law Institute of Victoria, the Family Law Section of the Law Council of Australia, the Association of Family and Conciliation Courts, the Australian Institute of Family Law Arbitrators and Mediators and Victorian Women Lawyers.

Jemma Mackenzie

Senior Associate

University qualifications

Bachelor of Laws (Hons) Monash University
Bachelor of Arts (Hons) Monash University

Email Jemma Mackenzie
jmackenzie@fortefamilylawyers.com.au

Other qualifications
Accredited Family Law Specialist,
Law Institute of Victoria

Connect on LinkedIn

Jemma is a Senior Associate at Forte Family Lawyers. She has worked predominantly in family law since being admitted to legal practice in December 2009.

Jemma obtained Specialist Accreditation as a Family Lawyer from the Law Institute of Victoria in 2015. Accreditation recognises the high level of knowledge and practical skills Jemma brings to each family law matter.

Jemma is mindful that the breakdown of a marriage or de facto relationship can be a stressful and often overwhelming experience for clients. She works with her clients to identify appropriate pathways for resolving both parenting and property matters.

Jemma prides herself on her ability to effectively communicate what can be complex legal principles and to provide realistic, up to date and accurate legal advice at each stage of a matter.

Jemma has experience in a wide variety of family law matters including division of property, maintenance (including urgent applications), Financial Agreements (including Agreements made prior to marriage), care and living arrangements for children, child support and family violence – including Intervention Order proceedings.

Prior to joining Forte Family Lawyers, Jemma worked in a Bayside family law firm and a boutique firm in Melbourne’s eastern suburbs. She has conducted litigation in both the Family Court of Australia and Federal Circuit Court in Melbourne and interstate.

In addition to her daily work with clients, Jemma has made presentations to financial advisors and medico-legal professionals about the family law system in Australia and what clients should know about family law prior to separating.

Jemma is a member of Victorian Women Lawyers, the Family Law Section of the Law Council of Australia and the Family Law Section of the Law Institute of Victoria.

Jane Bentley

Senior Associate

University Qualifications

Masters of Applied Law (Family Law), College of Law

Bachelor of Laws, Victoria University

Bachelor of Science, University of Melbourne

Email Jane Bentley

jbentley@fortefamilylawyers.com.au

Other Qualifications

Accredited Family Law Specialist, Law Institute of Victoria

Jane is a Senior Associate at Forte Family Lawyers. Jane is an Accredited Family Law Specialist as a recognised by the Law Institute of Victoria. Accredited Specialists demonstrate superior knowledge, experience and proficiency in their specialist area of law.

Additionally, Jane has undertaken a Masters of Applied Law in Family Law.

Prior to joining the firm, Jane has worked in both the private and community sectors where she worked on both complex parenting and property matters, regularly appeared in the Family Law Courts and through her work at a commercial firm Jane was able to build and enhance her commercial skills. Throughout her career, Jane has worked collaboratively with commercial lawyers providing advice where both family and commercial law intersect, as well as working directly with professionals on family law matters including psychologists, mediators, accountants and financial advisors.

Jane has a wide range of experience in different family law matters including financial agreements, family violence, parenting, IVF issues, matters involving grandparents, Hague Child Abduction Convention, child support, property and spousal maintenance.

Jane prides herself on her ability to communicate effectively with her clients during an emotional and challenging time. Jane builds strong relationships with her clients as she recognises that the legal system can appear complex and daunting and works with her clients to guide them through the process.

Jane is a member of the Courts Practice and the Property and Maintenance Committees of the Law Institute of Victoria which ensures that she is appraised of recent developments in family law and at the Family Law Courts. Jane is also a member of the Family Law Section of the Law Council of Australia.

Matthew Beckmans

Senior Associate

University qualifications

Bachelor of Laws, University of Western Sydney

Email Matthew Beckmans
mbeckmans@fortefamilylawyers.com.au

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Matthew commenced his legal career practising in a medium-sized rural law firm. Matthew is able to draw on his broad experiences over a number of practice areas, prior to practising exclusively in family law, to offer clients a well-rounded approach to tactically resolve complex legal issues.

Matthew has developed a special interest in complex disputes involving companies and trusts, insolvency and bankruptcy, taxation, and international/domestic relocation.  He also has a particular expertise in child support.

Matthew is aware and mindful of the financial challenges and restraints when attempting to resolve family law disputes, and sets out to achieve negotiated and cost effective outcomes which avoid court where possible. Matthew recognises the emotional issues attached to the breakdown of a relationship, and draws on his strong communication skills in demystifying the family law process, and to identify and explain possible options for resolution in a concise manner.

Matthew was a member of the steering committee of the Riverina Family Law Pathways Network, secretary of the South West Slopes Law Society, and a mock trial magistrate for the Law Society of New South Wales.

Prior to practising law, Matthew was rookie listed by the Sydney Swans, where he enjoyed a brief career.  He now plays for the Monash Blues in the VAFA.

Matthew is a member of the Family Law Sections of the Law Council of Australia and the Law Institute of Victoria.  He is on the Court Practice Committee of the Family Law Section of the Law Institute of Victoria.

Natasha Mastroianni

Senior Associate

University Qualifications

Bachelor of Laws (Hons), Latrobe University

Bachelor of Arts, Latrobe University

Masters of Applied Law (Family Law), College of Law

Email Natasha Mastroianni

nmastroianni@fortefamilylawyers.com.au

 

 

Connect on LinkedIn

Natasha Mastroianni has experience in a range of family law matters, including property settlements, financial agreements, parenting matters (including interstate and overseas relocation issues), child support and intervention order proceedings.

Natasha was admitted to practice in August 2014 and commenced her career in a generalist practice where she gained experience in family law, property law, wills and estates. Natasha worked in a boutique family law practice prior to commencing at Forte in February 2020.

Natasha has a Masters of Applied Law (Family Law) from the College of Law and speaks conversational Italian.

Having practical experience in other areas of law assists Natasha to understand the interrelated issues involved in her clients’ family law matters. She regularly appears on behalf of clients at Duty List Hearings and other Court events in the Federal Circuit Court, Family Court of Australia and the Magistrates’ Court of Victoria. Natasha also appears as a solicitor agent for interstate or rural practitioners when required.

Natasha prides herself on being able to understand and manage her clients’ expectations whilst providing realistic and practical advice. She acts with empathy and compassion when striving to achieve the best possible results for her clients.

Natasha is a volunteer lawyer with the Women’s Legal Service and is the Vice President of the Northern Suburbs Law Association. She is also a member of the Courts Practice Committee of the Family Law Section of the Law Institute of Victoria, the Family Law Section of the Law Council of Australia and Victorian Women Lawyers.

Vinh Nguyen

Associate

University qualifications

Bachelor of Laws, Deakin University

Bachelor of Commerce, Deakin University

Email Vinh Nguyen
vnguyen@fortefamilylawyers.com.au

Connect on LinkedIn

Vinh first worked at Forte Family Lawyers as part of his Graduate Diploma in Legal Practice at the Leo Cussen Institute for Law in 2017. He joined Forte Family Lawyers as a lawyer after his admission into legal practice in October 2017 and has, since then, worked solely in family law.

Prior to his admission as a lawyer, Vinh worked as a paralegal in a community legal centre and in a property and commercial law firm, where he gained valuable experience in property transactions.

Vinh is a member of the Family Law Section of the Law Council of Australia, the Law Institute of Victoria and the Asian Australian Lawyers’ Association. Vinh also volunteers at the Darebin Community Legal Centre.

Vinh is fluent in Vietnamese.

 

 

 

Mark Di Donato

Lawyer

University Qualifications

Bachelor of Criminology and Justice, Navitas College of Public Safety

Juris Doctor, Monash University

Email Mark Di Donato

mdidonato@fortefamilylawyers.com.au

Connect on LinkedIn

Mark started work at Forte Family Lawyers as part of his Graduate Diploma in Legal Practice at the Leo Cussen Institute for Law in 2019. Mark was later admitted into the legal practice in September 2019 and transitioned into a lawyer role with Forte Family Lawyers in February 2020.

Prior to his admission as a lawyer, Mark volunteered as a paralegal at Darebin Community Legal Centre and interned at a commercial law firm, where he gained valuable experience in property transactions and in intellectual property. Mark also completed a Professional Placement whilst completing his law degree where he provided legal advice on various family law matters through the Monash Law Clinic.

Mark is a member of the Family Law Section of the Law Council of Australia, and the Law Institute of Victoria. Mark volunteers at the Darebin Community Legal Centre and has provided advice on a range of issues including family law.