· 2021-11-25T12:16:04+0000 · 664 posts

Appellant Dispute Declaration Regarding Binding Financial Agreement

Glover & Webster [2021] FedCFamC1A 69 (19 November 2021)

The parties entered into a Binding Financial Agreement. In the hearing on whether there is property in existence not covered by the BFA, the primary judge declared that the BFA covers all the assets, liabilities, superannuation, financial interests and financial resources of the parties and there are no interests not covered by the terms of the BFA. By a Notice of Appeal filed on 6 May 2021, the first appellant appeals that declaration.

Facts:

The parties lived together from about 2010 and separated in 2015. On 1 July 2010 the parties entered into the Binding Financial Agreement (“the BFA”) pursuant to Pt VIIIAB of the Act. The agreement was to “deal with the division of their property and financial resources and the maintenance in the event of the breakdown of their relationship”. In separate annexures to the agreement the assets and financial resources of each party is set out.

It was stipulated in the settlement that the parties shall make no claim at law or in equity in relation to any further property that the other acquires in her sole name with money accumulated from her sole earnings or other income received by her during the relationship. After the parties separated, the first respondent commenced proceedings seeking a declaration that the BFA was binding on him and the first appellant. He sought that Q Pty Ltd (“the Q management business”) be sold and the net proceeds be divided between him and the first appellant. The first appellant sought a declaration that the BFA was not binding on the parties and should be set aside.

In the alternative, she sought a declaration that there was property which was not captured by the terms of the BFA and she sought orders altering the parties’ property interests. On 17 December 2018 the judge declared the financial agreement to be binding on the parties. It is the first appellant’s contention that shares in businesses operated by the first respondent’s Queensland businesses are owned by entities not listed in the first respondent’s schedule of assets and resources to the BFA, and further, that the shares were acquired as a joint venture by them and to which the first appellant made contributions. The first appellant further contended that the first respondent had failed to provide full and frank disclosure.

On 8 April 2021 a judge of the Family Court of Australia declared that a BFA entered into between the parties on 1 July 2010, covered all the assets, liabilities, superannuation, financial interests and financial resources of them or each of them and, as a consequence there were no interests not covered by the terms of that financial agreement. The effect of the decision was that there was no available property about which to make a property settlement order pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) as sought by the first appellant.

By a Notice of Appeal filed on 6 May 2021, the first appellant appeals that declaration contending that the primary judge erred in finding that the evidence of the forensic accountant was relevant only to a consideration of the parties’ property interests, not to whether there exists property not covered by the BFA; that there was no property not covered by the BFA; and that corporate shareholdings and trusts are the same as personal holdings.

Issue:

Whether or not the appellant has standing to appeal.

Applicable law:

Family Law Act 1975 (Cth) s 90SM - provides that in property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:

(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them--altering the interests of the parties to the de facto relationship in the property; or

(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship--altering the interests of the bankruptcy trustee in the vested bankruptcy property

Bankruptcy Act 1966 (Cth) ss 58(1)(b), 60 - by virtue of which were these applications to be re-instated, then heard, and then successfully determined in her favour, any property received by her would vest in her trustee.

Cummings v Claremont Petroleum Pty Ltd (1996) 185 CLR 124; [1996] HCA 19 - provides that a money judgment entered against a bankrupt has the effect of increasing the amount of the debts provable in his estate.

Guirguis v Guirguis (1997) FLC 92-726; [1997] FamCA - where the Full Court accepted that a bankrupt party cannot appeal property orders where the subject of the orders vests or will vest in the trustee in bankruptcy, because the bankrupt lacks sufficient interest.

O’Neill v O’Neill and Ors (1998) FLC 92-811; [1998] FamCA 67 - provides that the answer to the question posed above depends on the characterisation of the order from which this appeal is brought and the interest in that order.

Analysis:

The appeal was against property settlement orders, with the appellant husband becoming bankrupt between the making of those orders and the filing of the Notice of Appeal, which was dismissed as the effect of the bankruptcy was to leave the appellant husband without the necessary interest to support the institution of an appeal in his own name. It was submitted that a bankrupt party cannot appeal property orders where the subject of the orders vests or will vest in the trustee in bankruptcy, because the bankrupt lacks sufficient interest. The orders comprised two categories. First, those relating to the property of the bankrupt appellant husband, which vested in the trustee upon the making of the sequestration order, and secondly, those which related to a claim by the bankrupt appellant husband for property which would vest in the trustee if successful.

Conclusion:

In the circumstances discussed, the full Court held that there was no necessary interest to support the filing of the appeal. The Court dismissed the appeal.

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