Family Court of WA rules financial agreement not binding

A Financial Agreement has been signed. That doesn’t mean it is binding.

What is a Binding Financial Agreement?

A financial agreement is a written agreement made between two parties in a de facto or marital relationship in Western Australia. The agreement outlines how their property and financial resources will be divided in the event of separation. The word ‘binding’ in this context means that the agreement not only the parties to the agreement, but also the Family Court, in that the Court cannot make any Orders in relation to the matters covered by the agreement, except for enforcement Orders. To be binding, the agreement must comply with certain requirements set out in the Family Court Act 1997 (WA), including both parties receiving independent legal advice and the lawyer for each party providing a signed certificate to confirm this advice was received. It’s important to note that a binding financial agreement is different from a consent order, which is a court order made by the Family Court to formalise an agreement between separated parties about the division of their assets.

Evans v Goodwin [2022] FCWA 259

In Evans v Goodwin, the parties signed a financial agreement. However, the wording in the certificates of independent legal advice attached to the agreement did not match the wording of the requirements in s.205ZS(1)(c) of the Family Court Act 1997 (WA). The applicant sought a declaration that the agreement was not binding. If the applicant were to be successful, this would mean the Court would have jurisdiction to make property alteration Orders in terms other than what was provided for in the agreement.

What did the certificates say?

The certificates of independent legal advice stated that each party’s lawyer provided advice on two matters: (1) the effect of the agreement on the parties’ rights to apply for an order under the provisions of the Family Court Act 1997 (as amended), and otherwise at law and in equity; and (2) whether or not at that time it was to the advantage, financially or otherwise, for the party to enter into the agreement.

What did the Family Court Act require?

At the time, s.205ZS(1)(c) of the Family Court Act required that for each of the parties, a certificate be attached to the agreement and signed by the person providing the advice to that party, certifying that the party had been advised on: (1) the effect of the agreement on the rights of that party; and (2) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement.

What was the Family Court asked to decide?

It was not disputed that the wording in the certificates attached to the agreement did not match the wording in s.205S(1)(b) and (c) of the Family Court Act. The question for the Family Court to determine was whether, despite that, the wording in the certificates was sufficient to comply with the requirements in the Family Court Act to make the agreement binding.

What did the Family Court decide?

Although the Judge accepted that the Family Court Act did not require specific words to be used in the certificates, it did require the certificates to convey a specific meaning. Here, the Judge found that the wording in the certificates conveyed a meaning that was materially different to what was required by the Family Court Act. Specifically, the Judge accepted the submissions made on the applicant’s behalf that “the language used in the certificates speaks to an overall assessment of advantage, when what the legislation required was for the certificates to certify that advice was provided as to the advantages and disadvantages”.

The Family Court held that the certificates did not comply with the requirements in the Family Court Act. Therefore, the agreement was declared to be not binding.

This case is a good example of how even a technical error can result in a financial agreement being declared not binding. It highlights the importance of ensuring that parties engage family lawyers who are experienced in dealing with financial agreements under the Family Court Act. If you would like to know more about financial agreements, please contact KDK Family Law on (08) 6478 7892.