WIFE SEEKS TO SET ASIDE THE FINANCIAL AGREEMENT BETWEEN HER AND THE HUSBAND ON THE GROUND OF UNCONSCIONABLE CONDUCT

Cotsis & Cotsis [2021] FCCA 673 (7 April 2021)

This is a property proceeding where the applicant-wife seeks to set aside the financial agreement entered into by the parties prior to their marriage.

Facts:

In the latter part of 2012, the parties were planning to marry. Prior to living together, in 2012, the Wife discovered she was pregnant with their first child.  The parties planned an engagement party to take place in 2012.  In anticipation of their marriage, the parties also commenced negotiations for the preparation of a Financial Agreement in contemplation of their marriage.

In the midst of their preparations in 2012, tragedy struck.  At six months gestation, the Wife felt no movement from their unborn child for three days.  She attended hospital and undertook an ultrasound which revealed serious issues for their unborn child.  The unborn child was discovered to be non-viable with no demonstrable cardiac activity.

Their commitment to the relationship was such that the parties continued to plan for their marriage.  The Wife alleges she was pressured into entering the agreement by the Husband and his mother while the Husband denies that any pressure was brought to bear on the Wife to execute the agreement.  Ultimately the Financial Agreement was executed by the Wife on 7 December 2012 and later by the Husband on 17 January 2013 rendering the contract complete.

The parties married in 2014 and separated just over four years later on.  Their marriage produced two children.

The Wife seeks to set aside the Financial Agreement.  She says that having regard to all of the circumstances leading up to the completion of the agreement, including her emotional health following the stillbirth and the alleged pressure exerted by the Husband (and to some extent his mother), that the Husband’s conduct in accepting the agreement is unconscionable as she was laboring under a special disadvantage.

The Husband opposes the Wife’s application. He seeks an order that the Wife’s application be dismissed and a declaration that the Financial Agreement is binding upon the parties.

The Wife argues that the Financial Agreement should be set aside pursuant to section 90K(1)(e) of the Act

Issue: Should the Financial Agreement be set aside?

Law:

• Family Law Act 1975 90K(1)(e)

Analysis:

The Wife puts her case on the basis that the Husband knew or ought to have known that the Wife was laboring under a “special disability”.  It is said that the agreement fails because the Husband, having knowledge of the Wife’s special disadvantage, should not have accepted the Wife’s signature and the fact that he has done so amounts to unconscionable conduct.

The lack of medical evidence does not preclude a finding that the Wife was at a special disadvantage.  It is within the realms of common human experience that an event of the significance of a stillbirth at six months gestation, particularly of the parties’ first child, would have a devastating effect on both the Wife and the Husband.

Understandably there was a considerable focus in these proceedings surrounding the Wife’s headstrong determination to enter the agreement (albeit with some amendments to the original draft) prior to the stillbirth.  However, her ability to make decisions must be assessed at the date of signing the agreement.  Whilst the Wife could easily have signed the agreement prior to the stillbirth, the fact is that she did not. Notwithstanding the terms of the agreement were clearly settled prior to the stillbirth, the court is well satisfied that from at least that date, and possibly two days before when the Wife held concerns for her unborn child, the Wife was under a special disadvantage which deprived her of the ability to undertake a proper consideration of the agreement reached and whether to go ahead and sign.

To accept the Wife’s assent around seven weeks subsequent to the stillbirth, even in circumstances where she had previously indicated her consent, was at the very least imprudent and insensitive. There is no suggestion that the parties, in the context of their intimate and personal relationship, further discussed the Financial Agreement in the context of the significant change in their circumstances and how they were each feeling. The court finds that the Husband’s acceptance of the Wife’s consent to be exploitative in the circumstances.

Suffice to say that in the unique circumstances of these proceedings the Wife’s signing of the agreement seven weeks after the stillbirth, with her temperament and reaction, rendered her at a special disadvantage. The Wife was weaker and more vulnerable than the Husband at the time the agreement was executed and that the Wife’s special disadvantage was sufficiently evident to the Husband to make it unconscientious to accept her assent.

Conclusion: For all of the foregoing reasons the Financial Agreement will be set aside.

#property