2019---03---27---Pigott-Stinson---Homepage_02

The recent decision of Ellerton & Jennings[1] by the Federal Circuit and Family Court of Australia (Division 1) Appellate Jurisdiction provides Family Law practitioners with a helpful reminder about issues of critical significance when drafting provisions of a Financial Agreement dealing with spouse maintenance.

In this decision, the Court considered both the requirements of s 90E and also evidentiary matters underpinning findings made at trial in relation to s 90F(1A) of the Family Law Act 1975 (“the Act”). These sections relevantly provide:

90E: A provision of a financial agreement that relates to the maintenance of a spouse party to the agreement or a child or children is void unless the provision specifies: …

(b) the amount provided for…. the maintenance of the party…”

90F(1): No provision of a financial Agreement excludes or limits the power of a Court to make an order in relation to the maintenance of a party … if subsection (1A) applies.

90F(1A): This subsection applies if…when the Agreement came into effect … the party was unable to support himself or herself without an income tested pension, allowance or benefit.”

At trial[2], the Husband sought a declaration that the Financial Agreement entered into with the Wife was invalid, or alternatively, a declaration that provisions of a Financial Agreement that dealt with spouse maintenance were null and void; and further, for interim orders for payment of maintenance to him by the Wife.

The relevant clauses of the Agreement were:

19. The parties acknowledge that they are currently self-sufficient and capable of supporting themselves, and that no provision of spousal maintenance is necessary or desired. [emphasis added]

20.  Both parties fully and freely waive any and all rights or claims they may now or in the future have to spousal maintenance under the [Act] and under any or all statutes now or later enacted in this or any other state or country having jurisdiction over the parties.

21. The parties agree and covenant that in the event of the breakdown of marriage and a claim being made for settlement of property, variation of property interests or spousal maintenance by either or both of them, the terms of this Agreement will determine the issues between them”.

The trial judge found Clause 19 met the s 90E requirements and was not void; however, she found clause 20 did not. The trial Judge then considered the Husband’s evidence to determine if he was able to support himself without an income-tested pension or benefit at the time the parties entered into the Agreement, and was satisfied that he was not. Section 90F(1A) thus applied, and orders were made (inter alia) permitting the Husband to proceed with his applications for maintenance.

The Wife appealed, asserting error by the trial Judge in relation to matters relating to s 90F, and the Husband Cross-appealed, asserting error in relation to matters relating to s 90E.

In relation to s 90F(1A), the Court found that the Husband’s evidence about his financial circumstances was admitted without objection at trial, and the Wife could not later object on appeal to findings based on that evidence. The Court noted both the Husband and Wife’s evidence at trial was given by affidavit with no cross-examination by Counsel, and reference also made to other supplementary documents purporting to detail the Husband’s financial circumstances that were admitted without objection.

The Court further observed that the correct test to be applied when considering if s 90F(1A) applies, is whether a party is unable to support him or herself without an income-tested pension or benefit, not whether they are able to do so[3].

Regarding the s 90E issue, the Court affirmed the trial Judge’s decision that Clause 19 of the parties’ Agreement met the s 90E requirements. The Court determined that use of the words “no provision” satisfied the requirements of s 90E, and at paragraph [40] said:

“… [I]t means the same as the words “zero”, “nil” or “none”, but it is unnecessary to use those words. An amount can be “zero”, “nil” or “none”, or as here, “no provision”, and still be an amount”.

The Court additionally considered the only two other cases that have examined the s 90E requirements, as well as submissions made by Counsel and observed in relation to Clause 20:

“… There is a clear difference between a clause that provides for no claim to be made, and a clause that in effect specifies that there is no provision for spousal maintenance”. [emphasis added]

Both the Appeal and Cross-Appeal were thus dismissed, and no costs orders made. Consequently, the trial Judge’s Orders, which included an Order that the Husband be permitted to proceed with the Application for spouse maintenance, as well as urgent interim maintenance, then applied.

By extension, the decision provides a useful reminder of some key drafting points for Financial Agreements about spouse maintenance:

      1. Clauses of an Agreement seeking to exclude spouse maintenance must clearly specify an amount, not whether a claim for maintenance can be made or not. The latter fails to meet the s90E requirements.
      1. Where maintenance is to be precluded, to meet the s90E requirements the clause must be clearly drafted to include a quantifying amount such as “no provision” or “none”, or a specific amount such as “NIL”, or some other amount.
      1. In relation to s90F, some close consideration should perhaps be given to the parties’ financial circumstances, and whether if tested, the s90F(1A) threshold would be met taking into account the “terms and effect of the agreement”. Further, whether some specific reference should be made and included as part of the Agreement and/or its annexures, as to these matters. Noteworthy on this issue is to emphasise that the critical time specified for s90F(1A) to apply is “when the Agreement came into effect” and not when any subsequent application is made. Although not commented on in the appeal, this point was directly raised by the trial judge[4].

Further Information and contact details

Pigott Stinson regularly advises and acts for clients on a range of family law matters. If you would like any further information, please contact our Family Law partner, Celia Oosterhoff.

This Newsletter is produced by Pigott Stinson. It is intended to provide general information only. The contents of this Newsletter do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this Newsletter. Liability limited by a scheme approved under Professional Standards Legislation

 

Footnotes

[1] [2021] FedCFamC1A 39

[2] Jennings & Ellerton [2021] FCCA 1213

[3] Ibid, n1, at pars [16]-[18] inclusive

[4] Ibid, n2 at par [14] and [16]