Justine Woods, family law partner at Cooper Grace Ward, said the case Quincey & Quincey [2024] FedFamC1A 3 illustrates that even if a binding financial agreement is signed, it can still result in litigation if it is mishandled in regard to how the agreement is introduced to the relationship.
“I have seen this massive trend of people ringing up and asking if they could have a binding financial agreement now,” Woods said.
“It is generally after a number of years, in some cases at least a decade, often with children, can I have a binding financial agreement now because I brought in all of the assets or I’ve done most of the work, or the other person won’t work, and I’m very annoyed with them.”
Woods said although a binding financial agreement can be raised well into a relationship, particularly one that’s produced children and there’s already unhappiness, there is the potential to detonate the relationship, as was the case with Quincey.
“In the Quincey case, they started living together in 2009, married the following year and in 2018, about nine years into the relationship, things were already strained and unhappy, and there had been some police intervention when they were arguing about finances,” Woods said.
“The husband put to the wife a binding financial agreement where he kept all of his assets, and he was to pay her $80,000 in monthly instalments of $5,000. She signed the agreement, and there is more police intervention. They finally separate and the husband makes the instalment payments.”
She continued that after more than a year of those payments, the wife applied to set the agreement aside, alleging that it ought not to be found binding by the court and should be set aside.
“The meaning was that she would then continue as if the agreement had never been in place, and argue she was entitled to a property settlement. In reply the husband argued that she should be estopped from challenging the binding nature of the agreement because she’d taken the payments of $80,000 effectively,” Woods said.
“Estoppel is an equitable term, and it is effectively saying you’re not permitted to do something because of prior action or agreement. In this case, the binding financial agreement said she gets $80,000. You’ve taken those payments. You ought not to be able to challenge it at all.”
Woods said on appeal, the court confirmed the agreement was not binding as there were several flaws with it.
“In this case, the wife didn’t receive appropriate independent legal advice prior to entering into the agreement,” Woods said.
“However, the more important issue and what you as a person going through a family law matter or contemplating a financial agreement can control is making full and frank disclosure and attempting to have a coherent story.”
In this case, Woods said, the first draft of the agreement set out the husband’s assets. It took an appropriate amount of time to be negotiated, but by the time it came to be signed, $500,000 had come off the balance sheet.
“The husband had transferred money back to his parents in the USA, his other savings had been reduced and once you start to see references to post-dated documents in a judgment you know you’re going to suffer the consequences,” she said.
“In this case, he and his parents cooked up a loan agreement post-separation to say the money transferred to them was a repayment of a loan. The trial judge and the appeal judge said that there had been a failure to make disclosure of a material matter so that the agreement could not stand.”
She continued that in this circumstance there were disclosure issues that could have been addressed potentially, but there was probably too much bad behaviour for the agreement to stand.
“The wife didn’t receive independent legal advice in the way that she ought to have done and is required to have done under the Family Law Act, but this case is also illustrative of the importance of timing,” she said.
“Sometimes time cures what might seem to be aberrant behaviour, but if you try and insist and push through a binding financial agreement long into a committed relationship, unless there’s a real understanding between the spouses, you are just inviting misery.”
